Domestic online funds performance and positioning

The JSE outperformed global equity markets last year, with precious metal miners significantly driving returns by accounting for approximately 60% of its 2025 performance. Gold and platinum miners, which rose 208% and 222% respectively, benefitted from commodity price increases (gold +65% and platinum +127% year-on-year). Conversely, domestic economy-focused JSE-listed companies showed mixed results: banks and insurers rose, while retailers struggled after disappointing annual results. The South African government’s 10-year borrowing rate fell to 8.20%, contributing to a 9% quarter-on-quarter and 24.20% annual return for SA bonds. The consistent above-inflation performance across periods validates the defensive appeal of local fixed income.

On the global front, global bonds have delivered negative rand returns across all periods up to three years, with the one-year return at -5%. Currency translation effects have been the primary detractor. The rand’s significant appreciation, strengthening 12.20% against the US dollar over the past year, has materially impacted global asset returns when measured in rand terms. Global equity returns appear muted in rand terms, with a modest 6.30% one-year return and a -1% three-month return. Underlying dollar returns remain robust, as evidenced by strong longer-term annualised returns of 20.10% over three years and 17.10% over seven years. Overall, developed market equities concluded 2025 positively in US dollar terms. European stocks significantly outperformed US equities. US benchmarks underperformed due to investor anxiety about artificial intelligence (AI) infrastructure spending, highlighted by major declines in Oracle and Broadcom shares after disappointing results. Emerging market stocks outperformed developed markets, largely driven by the performance of Asian semiconductor companies and strong returns from Chinese tech giants like Tencent and Alibaba.

The multi-asset solutions added absolute returns over the quarter. All building blocks added returns on an absolute basis, with equities driving returns in our portfolios with exposure to them. In the equity building block, security selection in resources continued to drive performance. Quarter on quarter, our underlying managers in that building block trimmed exposure to industrials in favour of upweighting resources, reflecting their positive mediumterm outlook on the sector. The income building block also added returns on an absolute basis, as the government bonds held provided stability. Our underlying managers in the income building block trimmed their allocation to the belly of the curve, adding duration selectively and maintaining the rest in dry powder.

At a fund of funds level, the above led to reduced exposure to industrials, and an increase in exposure to resources in the Cautious and Growth FoFs on the equities side. In the fixed income space, allocations to the seven+ year bonds bucket and cash increased in the Income, Cautious and Growth FoFs, funded by reductions in allocations to the three to seven year space.

On the global front, allocations to global equities within the Cautious and Growth FoFs have stayed level following our decision to upweight them in the previous quarter. The PSG IM Opportunity Equity FoF added 9.30% over the quarter, beating its benchmark by 2.40%. This helped the fund end the year up 41.20%, ahead of its benchmark by 12.50%.

Driving this performance was our underlying managers’ continued preference for miners, as well as selected exposure to banks and allocations to Naspers and Prosus. The FoF remains fully invested in domestic growth assets. Over the quarter, our underlying managers trimmed allocations to financials and industrials, rotating into resources. At a fund of funds level, no changes were made to the composition over the quarter.