April 13, 2023

Manager Comments – 31 March 2023

Our management philosophy is grounded in providing investors with broad market exposure through passive index selection. Our approach provides maximum diversity and utility, resulting in the maximised quality of indices picked for our portfolios. Our product model asset allocations range from low to high risk, with a total of nine models, including one offshore-only exposure portfolio.

Since our inception in 2012, we have effectively and passively tracked the market through our index selection process. However, since 2015, we have needed to intervene more often due to changing market conditions, without chasing market alpha. Instead, we have needed to attend more often to the nature of market beta.

The COVID pandemic and the war in Ukraine accelerated changes to the global economy, markets and inflation, influenced by geopolitics, societal changes and supply chains. The relaxation of offshore constraints has also influenced our asset allocation. This has resulted in our asset allocation modelling process yielding more similar asset allocations across risk bands. As of 2021, we see only four distinct product model asset allocations, which we aim to consolidate our focus on while maintaining a proper balance between active and passive management.

Moving forward, we expect to be more active in 2023/24 to keep up with market structural movements while keeping our eyes on market beta. Our product allocation models are gradually shifting toward bonds, but we do not want to sacrifice too much equity for this. Higher risk-return product models will remain as such, as we strive to provide the best market tracking performance.

We are keeping a close eye on our international portfolio, which requires our close attention due to concentration. We may consider adding domestic assets with offshore look-through or exposure to Namibian bonds to enhance returns, but we will provide more information on this in our next publication.