Fairtree SA Equity Prescient Fund Q4 2025 commentary
Market overview
The FTSE/JSE All Share Index (ALSI) and the Shareholder Weighted Index (SWIX) increased by 8.1%, while the Capped Shareholder Weighted Index (Capped SWIX) increased by 8.9% during the quarter. Resources and Financials increased by 5.7% and 7.7%, respectively, while Industrials decreased by 1.2%. The rand appreciated by 4.1%, ending the quarter at R16.56 against the US dollar.
During Q4, Bonds increased by 9.0% and Cash returned 1.8%. The MSCI Emerging Market Index increased by 4.7% (in USD), outperforming the MSCI World Index, which increased by 3.1% (in USD). The MSCI South Africa Index increased by 14.1% (in USD).
Over the quarter, Iron ore increased by 5.6% to US$103.6/t, and Brent crude oil decreased by 1.8%, ending at US$60.9/bbl. Copper increased by 1.7% to US$10225.5/t. Gold increased by 11.9% to US$4319.4/oz, Platinum increased by 30.8% to US$2060.5/oz, and Palladium increased by 28.4% to US$1620.3/oz, while Thermal coal decreased slightly by 0.2% to US$86.2/t.
The VIX Index (Volatility or “Fear” Index) decreased by 8.2% to 15.0 during Q4.
Economic overview
The quarter was defined by a dramatic shift in US economic visibility. Markets grappled with a data blind environment caused by a 43-day US government shutdown that began in October and delayed critical employment statistics. Without the October Non-Farm Payrolls report, the Federal Reserve and investors were forced to make decisions based on headlines rather than fundamental data. This uncertainty was resolved in December with the “Super-Release” of combined employment data, which confirmed a soft-landing scenario. This clarification, paired with persistent Federal Reserve easing, including a second cut in October and a subsequent cut in December, ultimately fuelled a broad-based rally across global equities.
Geopolitics acted as a primary support for risk assets throughout the period. A surprise “Phase One” style trade truce between the US and China helped de-escalate tensions and provided a floor for markets. Gold surged into record territory, driven by safe-haven demand against policy risks. Copper also rallied to all-time highs above $12,000/t, fuelled by fears of structural shortages and tariff-related dislocations. In stark contrast, oil prices drifted lower and remained range-bound. Brent crude consistently declined as a growing supply surplus, and OPEC+ dynamics outweighed sporadic geopolitical risk spikes.
The domestic landscape was characterised by improving sentiment and strengthening fundamentals. The rand strengthened consistently throughout the quarter, supported by a favourable shift in sovereign risk perceptions following South Africa’s removal from the FATF grey list and a credit rating upgrade by S&P. These improvements, combined with inflation printing below expectations, allowed the South African Reserve Bank (SARB) to cut rates by 25 basis points. The SARB also lowered its inflation target to 3%, reinforcing a disinflationary bias that helped anchor real-rate expectations. Consequently, local bonds performed well, and equity performance was broad-based, with banks benefiting from the easing risk environment and resources supported by the strong metals complex.
Portfolio performance
The Fund’s retail asset class returned 8.84% during the quarter, underperforming the FTSE/JSE Capped Shareholder Weighted (Capped SWIX) Index by 8bps. The Resource sector was the key performance contributor during Q4. The Fund’s performance was positively impacted by positions in Impala (18.79%), FirstRand (20.55%), AngloGold (19.36%), Northam Platinum (19.97%) and Standard Bank (22.85%). Positions in Naspers (-11.28%), Prosus (-15.18%), Mr Price (-12.57%), Foschini (-21.86%), and WeBuyCars (-13.09%) detracted from performance.
Portfolio positioning and outlook
As we move into a new year, elevated global uncertainty, earlier Federal Reserve rate cuts, and a sustained US dollar headwind are expected to remain supportive of precious metals. We therefore remain constructive on gold and have continued to build exposure to platinum. Given its relatively small physical market, platinum appears increasingly well-positioned to benefit from incremental investment flows, a dynamic that could extend into 2026.
Emerging markets, particularly China, India, and parts of Southeast Asia, are likely to remain the primary contributors to global growth into the year-end and beyond. Looking ahead to 2026, stabilising financial conditions and improving domestic demand in several emerging economies could help sustain growth momentum, even as advanced economies continue to face structural and cyclical challenges. In developed markets, growth is expected to remain subdued, with lingering risks from restrictive fiscal settings, elevated debt levels, and cautious consumers.
Domestically, market sentiment remains cautiously optimistic regarding fiscal policy and the durability of the GNU as 2025 concludes. South Africa’s foreign relations have been tested during the year and will remain an important theme heading into 2026. The local economy could benefit from a more accommodative monetary policy stance, lower oil prices—supportive of a benign inflation outlook—and the potential for improved trade relations with the United States. If realised, these factors could provide a more supportive macro backdrop in 2026 for domestic counters such as retailers, banks and industrials.
The transition from 2025 into 2026 is likely to be characterised by continued uncertainty and episodic volatility. Accordingly, portfolio construction remains focused on maintaining liquidity, diversification, and flexibility to navigate a range of possible outcomes. While near-term risks persist, periods of uncertainty often create attractive long-term investment opportunities, which we will continue to identify and pursue as we position the portfolio for the year ahead.
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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 31 December 2025). The fund has returned an annualised return of 15.86% since inception (November 2011) (benchmark annualised return of 12.11% since inception). The fund’s annualised performance over 1-year is 38.42% (Benchmark: 42.61%). The fund’s annualised performance over 3-years is 18.56% (Benchmark: 20.38%). The fund’s annualised performance over 10-years is 14.69% (Benchmark: 10.49%). Fund returns disclosed are annualised returns net of investment management fees and performance fees. Annualised return is the 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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