Fairtree SA Equity Prescient Fund Q3 2025 Commentary

03 November 2025, 09:16 Cor Booysen

min read Guides

Market overview

The FTSE/JSE All Share Index (ALSI) and the Shareholder Weighted Index (SWIX) increased by 12.9%, while the Capped Shareholder Weighted Index (Capped SWIX) increased by 12.8% during the quarter. Industrials, Resources and Financials increased by 3.7%, 47.6% and 0.3% respectively. The rand appreciated by 2.5%, ending the quarter at R17.27 against the US dollar.

During Q3, Bonds increased by 6.9% and Cash returned 1.8%. The MSCI Emerging Market Index increased by 10.6% (in USD), outperforming the MSCI World Index, which increased by 7.3% (in USD). The MSCI South Africa Index increased by 20.4% (in USD).

Over the quarter, Iron ore increased by 11.2% to US$98.5/t and Brent crude oil increased slightly by 0.3%, ending at US$66.0/bbl. Copper increased by 1.7% to US$10225.5/t. Gold increased by 16.8% to US$3859.0/oz, Platinum increased by 15.9% to US$1575.7/oz, and Palladium increased by 14.0% to US$1261.3/oz, while Thermal Coal decreased by 10.7% to US$86.4/t.

The VIX Index (Volatility or “Fear” Index) decreased by 2.7% to 16.3 during Q3.

Economic overview

The third quarter of 2025 was defined by a significant dovish pivot from the US Federal Reserve in response to a cooling American economy, a theme that intensified throughout the period and culminated in a flight to safety across global markets. While the Fed remained on hold in July, it signalled a greater tolerance for inflation at its Jackson Hole symposium in August. This shift was solidified in September with a 25bps rate cut after the August Non-Farm Payrolls report fell significantly short of expectations, confirming that downside economic risks were materialising.

In South Africa, the quarter was marked by a proactive policy response and continued progress on the domestic reform agenda. The SARB’s Monetary Policy Committee cut the repo rate by 25bps in July but adopted a more cautious stance by holding rates in September. The local “self-help” story gained traction with key advancements in logistics, notably Transnet awarding open-access rail slots to private operators and operational metrics at key ports showing improvement. However, the economy faced external headwinds, including a new 30% US tariff on certain South African goods, which came into effect in August. The domestic economic picture remained mixed; while robust new vehicle sales were a consistent bright spot, other retail indicators reflected a consumer under pressure, though resilient tax collections pointed to stable formal sector earnings.

Commodity markets were volatile, with oil prices gaining in July on strong demand before trending lower through the end of the quarter on supply-side dynamics. Gold became a primary beneficiary of the rising global uncertainty and the prospect of lower interest rates, with its rally accelerating dramatically in September amid a US government shutdown, pushing the metal to record highs.

Separately, South Africa ticked off the final Financial Action Task Force milestones and is expected to be removed from the grey list in October.

Portfolio performance

The Fund’s retail asset class returned 12.50% during the quarter, underperforming the FTSE/JSE Capped Shareholder Weighted (Capped SWIX) Index by 25bps. The Resource sector was the key performance contributor during Q3. The Fund’s performance was positively impacted by positions in Gold Fields (77.24%), AngloGold (53.85%), Prosus (22.10%), Northam Platinum (47.87%) and Impala (40.0%). Positions in Truworths (-21.15%), Sanlam (-5.73%), Nedbank (-7.9%), Foschini (-13.87%), and Reinet (-11.07%) detracted from performance.

Portfolio positioning and outlook

Heightened global uncertainty, Fed rate cuts and a sustained dollar headwind should continue to benefit precious metals into the last quarter of 2025. Thus, we remain constructive on gold, but we have begun building a position in platinum, which is a much smaller physical market than gold and seems to be a favoured destination for investment capital.

Emerging markets (especially China, India, parts of Southeast Asia) will remain the engine of growth for the remainder of the year, helping offset weaker performance in advanced economies. In advanced economies, growth is likely to remain modest, with downside risks from waning stimulus, and soft consumer demand.

Domestically, the market remains optimistically cautious concerning fiscal policy and the longevity of the GNU. South African foreign relations have been tested this year and will remain in the spotlight. SA could benefit from more accommodative monetary policy, lower oil (translates into lower inflation) and a possibility of a better than expected trade decision from the US.

The outlook for the remainder of 2025 is challenging to forecast and uncertain. Thus, we have ensured that the portfolio has liquidity and diversification to position it to navigate multiple possible scenarios. While uncertainty and volatility are concerning, they often create compelling opportunities, which we will continue to pursue.

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Disclaimer

Fairtree Asset Management (Pty) Ltd is an authorised financial services provider (FSP 25917). Collective Investment Schemes in Securities (CIS) should be considered as medium-to-long-term investments.

The value may go up as well as down and past performance is not necessarily a guide to future performance. CISs are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions is available on request from the Manager. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. Performance has been calculated using net NAV to NAV numbers with income reinvested. The performance for each period shown reflects the return for investors who have been fully invested for that period. Individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestments and dividend withholding tax. Full performance calculations are available from the manager on request. There is no guarantee in respect of capital or returns in a portfolio. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to www.fairtree.com.

Highest rolling one-year return 101.47% (Benchmark: 54.24%) and lowest rolling one-year return -23.82% (Benchmark: -24.53%) (information to 30 September 2025). The fund has returned an annualised return of 15.46% since inception (November 2011) (benchmark annualised return of 11.66% since inception). The fund’s annualised performance over 1-year is 22.56% (Benchmark: 28.13%). The fund’s annualised performance over 3-years is 21.16% (Benchmark: 21.59%). The fund’s annualised performance over 10-years is 14.18% (Benchmark: 9.61%). Fund returns disclosed are annualised returns net of investment management fees and performance fees. Annualised return is weighted average compound growth rate over the period measured. Fund investment risk indicator level: Aggressive. Full performance calculations are available from the manager on request. Annualised performance: Annualised performance shows longer term performance rescaled to a 1-year period. Annualised performance is the average return per year over the period. Actual annual figures are available to the investor on request. Highest & Lowest return: The highest and lowest returns for any 1 year over the period since inception have been shown. NAV: The net asset value represents the assets of a Fund less its liabilities.

This document is confidential and issued for the information of the addressee and clients of Fairtree Asset Management only. It is subject to copyright and may not be reproduced in whole or in part without the written permission of Fairtree Asset Management. The information, opinions and recommendations contained herein are and must be construed solely as statements of opinion and not statements of fact. No warranty expressed or implied, as to the accuracy, timeliness, completeness, fitness for any particular purpose of any such recommendation or information is given or made by the Manager in any form or manner whatsoever. Each recommendation or opinion must be weighed solely as one factor in any investment or other decision made by or on behalf of any user of the information contained herein, and such user must accordingly make its own study and evaluation of each strategy/security that it may consider purchasing, holding or selling and should appoint its own investment or financial or other advisers to assist the user in reaching any decision. The Manager will accept no responsibility of whatsoever nature in respect of the use of any statement, opinion, recommendation, or information contained in this document. This document is for information purposes only and does not constitute advice or a solicitation for funds.

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