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CAMISSA ASSET MANAGEMENT INVESTMENT TEAM
Despite energy supply shocks and higher borrowing costs, the global economy proved more resilient than expected in the third quarter, as investment in artificial intelligence, strong markets and resilient US consumers helped sustain growth.
The energy supply shock arising from the conflict involving Iran, together with higher borrowing costs, created a challenging environment. Yet substantial investment in artificial intelligence (AI), strong financial markets in the US and Asia, and relatively resilient American consumers helped keep economic growth on track.
The US has remained the main driver of global growth. Its labour market continues to hold up, with demand for workers supporting wage growth. Households are, however, feeling the effects of higher energy prices and interest rates, leaving less money available for other spending and making borrowing more expensive. Tax cuts have provided some relief, while rising share prices have helped support household wealth and spending. At the same time, the enormous investment in AI infrastructure and technology has become an increasingly important source of business spending and economic growth.
China faces a very different set of challenges. Falling prices and the prolonged downturn in its property market continue to weigh on economic activity. Exports, particularly high-tech products, remain a bright spot, but domestic demand has been harder to revive. Despite government efforts to stimulate the economy through lower interest rates, increased spending and targeted support, consumers remain cautious and confidence has yet to recover meaningfully.
Europe continues to contend with the consequences of its energy and industrial challenges. Its manufacturing sector, already weakened by the energy crisis following Russia’s invasion of Ukraine, has lost further ground to international competitors, particularly China. There are, however, some encouraging signs. Employment remains relatively strong, particularly in southern Europe, while increased government spending, led by Germany, could provide much-needed support for economic activity.
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Japan is in a somewhat stronger position. Rising wages are helping to improve household incomes, and temporary government support could encourage consumers to spend more. Both Japan and Europe are also benefiting from increased investment in AI and related exports, although Japan appears better placed to capture some of this growth.
Closer to home, South Africa’s economic recovery remains fragile. Household spending is weak, with higher energy costs and interest rates adding to the pressure on consumers. More concerning, though, are the long-standing obstacles preventing the economy from growing faster. Our transport infrastructure continues to fall short of what businesses need, despite recent improvements. Poor municipal service delivery, corruption, organised crime and weak business confidence also discourage investment and limit economic activity. Fixed investment has recovered modestly from very low levels, but this has yet to translate into meaningful job creation.
There have been some positive developments. Operation Vulindlela, together with the partnership between government and business, has helped advance reforms in key areas of the economy. The Government of National Unity has also brought changes in leadership across important ministries and renewed attention to addressing the country’s structural weaknesses. While encouraging, implementation remains slow. South Africa needs to turn policy commitments into tangible improvements in infrastructure, service delivery and economic opportunity.
Against this backdrop, the Camissa Islamic Equity Fund gained 2.6% in the quarter, ahead of its competitor average of 0.3%. Over the past year, it returned 22.0%, ranking first in its category and comfortably ahead of the competitor average of 5.9%. Over ten years, the fund has returned 11.0% per annum, compared with 8.4% for its competitors. Since inception in 2009, it has returned 11.6% per annum.
The Camissa Islamic Balanced Fund gained 2.1% during the quarter, also outperforming its competitor average of 0.3%. Its one-year return was 15.9%, compared with 6.3% for competitors. Over ten years, the fund returned 9.4% per annum, ahead of the competitor average of 8.2%. Since inception in 2011, it has delivered 8.7% per annum, well ahead of inflation.
Our global equities contributed positively to performance, but we remain underweight in the US relative to our benchmark, while favouring European and Japanese equities, where we continue to find attractive valuations. Our portfolios currently have high exposure to Omnia, Bytes, Exxaro and PPC, alongside a broader selection of mispriced stocks, including deeply discounted local mid-cap companies. We also have high exposure to longer-duration government sukuk, which offer attractive inflation-adjusted returns.
Camissa has managed Shariah-compliant investments since 2009, when it launched the Camissa Islamic Equity Fund. Since then, the range has grown to five Shariah-compliant funds, offering investors diversified exposure across global and local markets. Our deep expertise is underpinned by a robust Shariah governance framework. Our Shariah funds operate in accordance with internationally recognised standards of the Accounting and Auditing Organization for Islamic Financial Institutions, with independent oversight from a dedicated Shariah supervisory board.
Disclaimer: The Camissa unit trust fund range is offered by Camissa Collective Investments (RF) Limited [Reg no 2010/009289/06], a registered management company in terms of the Collective Investment Schemes Control Act, No 45 of 2002. Camissa Collective Investments is a subsidiary of Camissa Asset Management (Pty) Ltd [a licensed financial services provider], the investment manager of the unit trust funds and a voting member of the Association for Savings and Investment South Africa (Asisa).
Fees and performance: Unit trusts are generally medium- to long-term investments. The value of units will fluctuate, and past performance should not be used as a guide for future performance. Camissa does not provide any guarantee either with respect to the capital or the return of the portfolio(s). Foreign securities may be included in the portfolio(s) and may result in potential constraints on liquidity and the repatriation of funds. In addition, macroeconomic, political, foreign exchange, tax and settlement risks may apply. However, our robust investment process takes these factors into account. Unit trusts are traded at ruling prices and can engage in scrip lending and borrowing. Exchange rate movements, where applicable, may affect the value of underlying investments. Different classes of units may apply and are subject to different fees and charges. A schedule of the maximum fees, charges and commissions is available upon request. Commission and incentives may be paid, and if so, would be included in the overall costs. Camissa has the right to close the portfolio to new investors to manage it more effectively in accordance with its mandate. Additional information is available free of charge on our website or from Client Service.
