It is said that trust is earned over time, however, returning growth is the best reward for trust earned

To our clients, thank you for your continued trust and support during one of the most trying periods of our generation. Your continued support is always appreciated by GIB.

The GIB Investment team is proud to reward members who stayed invested with us and rode out the severe capital market reactions of 2020.

Throughout the volatility experienced in 2020, we retained our commitment to investing for the long term. We used the uncertainty created by the pandemic to add quality assets to our already robust portfolios and we believe that the conviction of the GIB Investment Philosophy and Process will continue to deliver compelling returns in the coming years.

The Destiny Portfolios ended the first quarter of 2021 with returns that not only outperformed their benchmarks, but also provided returns greater than most of our competitors.

We have some cause for cautious optimism for the year ahead on the back of a sharp recovery in global equity markets, as governments and central banks pump massive amounts of stimulus into the financial system in a bid to restore confidence and activity. This recovery is providing a tailwind to South Africa as trade relations and exports pick up.

The largest single contribution to the Destiny Portfolios’ returns came from Naspers which benefited as Tencent continued to outperform expectations. Resources were once again a large component of Destiny’s returns, benefiting from continued strength in precious metals such as gold, copper and iron ore. Retailers benefited from better-than-expected sales updates, highlighting a surprisingly resilient South African consumer.

Destiny Portfolio Positions

The low interest rate environment that commenced in 2020 reduced the appeal of cash and we therefore increased Destiny’s local bond positions and simultaneously increased offshore exposure. Locally, the Portfolios are well positioned in the equity market with large exposure to Rand hedge companies.

Surprisingly, results from many SA domestic companies have exceeded expectations thus far, with more top-line resilience and better cost control than anticipated. We however remain concerned about headwinds into 2021 as a weak macroeconomic environment persists.

Mining companies continue to be a meaningful portion of Destiny’s equity exposure given their still undemanding valuations and solid free cash flow. Diversified miners are benefiting from tight markets due to the resilience of Chinese demand, the limited supply response as well as their disciplined capital expenditure over the last few years.

Banks have exceeded our expectations as borrowers resume debt repayments and low interest rates improve affordability. Sizeable provisions offer near-term protection to bank earnings in a weaker economic environment.

Despite the sell-off in property shares, we have not built up the position given concerns over the long-term outlook for rentals and weak balance sheets.

The Destiny Portfolios benefited from their offshore allocations as international markets rebounded rapidly. Exposure to technology companies aided performance where Covid-19 resulted in an acceleration of the adoption of the digital economy whilst the physical economy was locked down.

In Conclusion

The Destiny Portfolios finished the quarter on a strong note.

We are pleased with our performance, but it must be borne in mind that our focus is not on short-term results but rather on long-term sustainability. To this end, we are proud that the Moderate and Conservative Portfolio’s will be celebrating their 20th anniversary during the next quarter.

Importantly, returns cannot be reviewed in isolation and therefore we have included the Industry Survey to 31 March 2021.