During September, volatility was particularly prevalent at the beginning of the month - in line with historical seasonality.

The primary focal point for market participants stemmed from the Federal Open Market Committee (FOMC) meeting. The Federal Funds target range was cut by 50bps to a range of 4.75% to 5%. All committee members voted for this decision, except Michelle W. Bowman, who wanted to lower the range by 25bps. The committee’s press release emphasised a growing confidence that inflation is steadily returning to the 2% target, and it specifically mentioned the need to support maximum employment. Moreover, there were some updates made to the Fed’s projection materials worth noting. While minor changes were made to GDP growth forecasts, upward revisions were projected in the unemployment rate throughout the forecast horizon, which supports the recent focus of the Fed’s prospective monetary policy actions having an increased weight toward developments in the labour market. Encouragingly, downward revisions were made to both headline and core Personal Consumption Expenditure inflation forecasts for this year and 2025. These updates translated into a lower projected Federal Funds rate path throughout the forecast horizon, although the longer run rate estimate was lifted to 2.9% from 2.8% previously. 

The Eurozone Central Bank also continued their monetary policy easing cycle by cutting the refinancing rate by another 25bps to 3.5%. Conversely, the Bank of Japan kept their policy rate on hold with some dovish commentary from the Governor stating that upside inflation risks are waning amid the recent Yen strength. It was affirmed that further rate hikes are not of immediate necessity suggesting that prospective tightening will likely be delayed at the next monetary policy meeting. Shigeru Ishiba from the Liberal Democratic Party has been elected as the new Prime Minister effective 1 October 2024. The primary policy objective is to lift tax revenues through a strong economy.         

In other Asian markets, China announced a slew of prospective stimulus measures to revitalise their economy. This primarily includes easier monetary policy dynamics from various interest rate facilities, lowering the Reserve Requirement Ratio even further to free up liquidity for the financial sector to increase lending and introducing a new swap facility that can be accessed to increase access to liquidity to buy local stocks.   

The first debate between former President, Donald Trump, and current Deputy President, Kamala Harris, resulted in little change in the presidency polling probabilities. Moreover, a second assassination attempt on Donald Trump proved to be unsuccessful and points toward rising tensions as we head closer to the November elections. This comes on the back of a slowing but growing global economy in recent months likely causing sectoral outperformance among defensive and interest rate sensitive sectors. More frequent data such as retail sales and industrial production figures in the US point toward an increased level of resilience relative to market expectations, which if sustained, may point to an inflection point in the growth cycle.

Fund strategy

From a security selection perspective, we remain positioned in selected opportunities within our internal equity building blocks, consisting primarily of Ashburton’s Global Leaders and Global Equity Growth Funds. Themes such as the rise of Artificial Intelligence (AI) and a potential recovery in China are on our radar. We are encouraged by the commitment toward even further accommodative monetary policy measures in China and the subsequent market reaction. We are waiting for more tangible evidence of a sustainable recovery in economic growth given the soft credit uptake we have seen thus far. Policies aimed at restoring consumer confidence, addressing the credit profile in the debt-ridden property sector and encouraging a sustainable turnaround in credit extension will go a long way in lifting potential economic growth. We remain acutely aware that both investor positioning and multiples historically change rapidly once confidence returns of which we have seen nascent evidence of this occurring.

We opted to take advantage of the volatility during the month and added further beta to the multi-asset funds. This is due to several factors including front-loading monetary policy support from the US Fed; better-than-expected economic data more recently; an easing of lending standards from major commercial banks; and as we move into a more favourable seasonal period. 

Fund performance

The USD Global Growth Fund climbed 1.9%[1] while the USD Global Balanced Fund increased 1.7% - both in line with their respective Morningstar peer groups. There was differentiated performance among our internal building blocks as the Ashburton Global Equity Growth Fund meaningfully outperformed, while the Ashburton Global Leaders Fund lagged its peers. From the beginning of October, Morgan Stanley takes over the management of the Global Leaders Fund. They have an exemplary record in selecting high quality companies that compound their intrinsic value over time.

Waystone Management Company (Lux) S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF) (ref A00000395 & S00000734), Waystone Management Company (Lux) S.A. is a company located in Luxembourg, L-1273 Luxembourg at 19, Rue de Bitbourg. This document is Issued by Ashburton Fund Managers (Pty) Limited (The Investment Manager) (Reg number 2002/013187/07),which has its registered office at 3 Merchant Place, 1 Fredman Drive, Sandton, 2196, South Africa and is an authorised financial services provider (FSP number 40169), registered with the Financial Sector

Conduct Authority (FSCA). Ashburton’s Global Leaders and Global Equity Growth Funds are authorised in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier (CSSF).In South Africa, the Fund(s) is/are approved for promotion under section 65 of the Collective Investment Schemes Control Act 2002. The Fund Prospectus, and further information including pricing and charges, may be viewed at the Fund’s representative office in South Africa: Ashburton Management Company (RF) Proprietary Limited (“Ashburton CIS”), of the same address. Ashburton CIS is an approved collective investment schemes manager regulated by the Financial Sector Conduct Authority and a full member of the Association of Saving and Investments South Africa. In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document, outlining potential constraints on liquidity &

repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The value of participatory interests and the income from them may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to the future performance. Where an investment involves exposure to a currency other than that in which it is denominated, changes in rates of exchange may cause the value of the investment to go up or down. CIS portfolios are traded at ruling prices and can engage in borrowing and scrip lending. A full detailed schedule of fees, charges and commissions is available from Ashburton on request and incentives may be paid and if so, would be included in the overall costs. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has a right to close the portfolio to new investors in order to manage the portfolio more efficiently in

accordance with its mandate. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton Fund Managers (Pty) Limited is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distribution of this document and should be satisfied in doing so that there is no breach of local legislation or regulations. This is a marketing communication. The Management company has the right to terminate the arrangements made for Marketing.

Additional information about this product, including brochures, prices,  application forms, Prospectus, KIID and annual or half-yearly reports, can be obtained from the Manager, free of charge, and from the website: www.ashburtoninvestments.com