NAVIGATING THE STORM | U.S TARIFFS AND YOUR INVESTMENTS

In light of the recent market volatility following President Donald Trump’s announcement of sweeping new tariffs last week, we want to provide clarity on what’s happening, how it may impact markets, and most importantly how your portfolio is positioned to weather this period of uncertainty.

MARKET OVERVIEW

Global markets have reacted sharply to the U.S. administration’s introduction of broad-based tariffs, including a universal 10% levy on imports and significantly higher duties on goods from countries such as China, the European Union, and South Africa. These measures have heightened fears of a trade war and raised the prospect of a global economic slowdown, with equity markets experiencing heightened volatility in response.

As of this morning, Asian stocks are deeply in the red: the TOPIX is down 7.8%, the Shenzhen off 11.3% and the Hang Seng 12.3% lower. European markets are down sharply too, the FTSE 100 shedding 4.7% and Euro Stoxx 50 6.1% at the time of writing. US futures markets do not look pretty either, with S&P futures off close to 5%.

FUND POSITIONING AND RESILIENCE

While market volatility can be unsettling, it is also an expected part of long-term investing. We would like to reassure you that the funds you are invested in are well-positioned to navigate these turbulent conditions:

• Diversification Across Asset Classes and Strategies Our portfolios are constructed using a multi-asset, fund-of-funds approach, ensuring broad exposure across asset classes, investment styles, and geographies. This diversification acts as a fundamental risk mitigator in uncertain times.

• Prudent Equity Positioning We have maintained a slight underweight in equities, which has proven beneficial given the recent equity market weakness. This reflects our proactive risk management and caution leading up to the announcement.

• Strong Cash and Bond Holdings Our portfolios hold meaningful allocations to cash and bonds, providing an effective buffer against equity volatility and giving us flexibility to take advantage of future opportunities as they arise.

• Offshore Exposure and Currency Support All our funds have material direct offshore** exposure**, this is however not limited to just global equities—it includes offshore bonds and diversified holdings that reduce reliance on any single market outcome. Additionally, the depreciation of the Rand serves to cushion local investors from the impact of offshore market declines, providing an important natural hedge.

• Rand Hedge Protection in Local Equity Within our South African equity allocation, many of the underlying holdings are Rand hedge companies—businesses that earn revenues globally but are listed locally. These exposures have historically acted as a stabilising force in times of currency volatility.

• Diverse Manager Perspectives Through our fund-of-funds structure, we benefit from a broad range of manager views and strategies. Notably, some underlying managers adopted a more cautious stance in anticipation of potential market disruptions, adding further resilience to the portfolio.

• Key Sectors

While the resource sector locally is susceptible to the global growth scares such as the one we are seeing. SA is fortunate that PGMs, manganese, coal and gold — which together comprise 76% of South African mineral exports to the US were excluded.

LOOKING AHEAD

While we cannot predict the precise trajectory of markets in the short term, history reminds us that periods of dislocation often create opportunities for long-term investors. Our focus remains on safeguarding your capital, identifying opportunities, and maintaining the discipline needed to stay aligned with your investment goals.

We encourage you to stay calm and focused on the long term. Market volatility, while uncomfortable, is a normal part of investing. Your portfolios have been thoughtfully constructed to manage through these cycles.

As Warren Buffett once said, “The stock market is a device for transferring money from the impatient to the patient.” Now more than ever, patience and perspective are key.

Should you have any questions or concerns, please do not hesitate to reach out to us directly.