Fears that the surge in global equity prices could come to an abrupt end proved unwarranted as the global equity market, measured by the MSCI World Index, ended 16.9 percent higher for the third quarter. The MSCI Emerging Market Index returned a staggering 20.1 percent for the quarter.

The global market was strongly supported by improving economic fundamental factors as well as positive earnings surprises, according to Dr Prieur du Plessis, Plexus group chairman. Although this was the first quarter of positive year-on-year growth for the MSCI World Index since the last quarter of 2007 with 4.7 percent, the global market ended the quarter 32 percent below the peak reached in the fourth quarter of 2007.

"The South African market underperformed with a total return of 13.9 percent during the third quarter due to the rand’s strength against the US dollar," says Du Plessis. "Furthermore, the local market lagged the MSCI Emerging Market’s 16.2 percent for the year due to the rand’s appreciation of 9.7 percent and 6.3 percent against the US dollar and euro respectively."

During the quarter, the broad financial and industrial sectors of the South African market outperformed significantly with returns of 15.2 percent and 16.3 percent respectively. The FTSE/JSE All Share Index yielded a total return of 7.7 percent for the 12 months ended 30 September 2009, but is still down 20.3 percent from the high in the second quarter of 2008.

FTSE/JSE Gold Index a star performer

"Sector rotation was again the name of the game as the FTSE/JSE Gold Index, star performer over one year, lagged with a total return of six percent for the quarter," says Du Plessis. "The index was the top-performing sector for the 12 months to end September with a total return of 33.1 percent, followed by the FTSE/JSE Financial Index with 6.5 percent, FTSE/JSE SA Industrial Index with 15.5 percent and FTSE/JSE Resources Index with 1.1 percent."

Global bonds, as measured by the JP Morgan Global Bond Index, returned six percent for the quarter. The BESA All Bond Index returned three percent with income reinvested, significantly lagging the JP Morgan Emerging Market Bond Index’s 10.2 percent. Emerging market bonds with 18.3 percent over the year also led global bonds (14 percent) and the BESA Bond Index (9.1 percent).

The best-performing unit trust subcategory over three months was the Foreign — Equity — Varied Specialist category with 18.9 percent. "This can mainly be attributed to the good returns delivered by the global property sector," says Du Plessis. "The worst-performing subcategory was Foreign — Fixed Interest — Varied Specialist with -1.3 percent as a result of the strength of the rand."

Over 12 months the best performing sector was Domestic — Equity — Financial with 16.9 percent, followed by Domestic — Equity — Value with 15.3 percent. The worst category over 12 months was the Foreign — Equity — Varied Specialist category with -17.2 percent.

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