The Palmyra SA Equity Fund is a general equity fund that follows a bottom-up, relative-value investment philosophy and invests exclusively in local equities. During the quarter, we increased the fund’s exposure to local equities as geopolitical tensions in the Middle East showed signs of easing. Despite ongoing uncertainty, we continue to view local equities as attractively valued relative to global markets, offering compelling long-term return potential.

At quarter-end, the fund was positioned with a modest overweight allocation to industrial shares, a neutral weighting in financials, and an underweight exposure to resources relative to the FTSE/JSE Capped All Share Index.

The fund continues to focus on identifying attractively valued South African companies with strong long-term fundamentals. Improving geopolitical stability and compelling local valuations supported an increased allocation to domestic equities during the quarter. The portfolio remains tilted towards selected industrial businesses while maintaining balanced exposure across sectors.

The Palmyra Property Fund is a benchmark-conscious fund that follows a 12-month total return momentum investment strategy. The portfolio is rebalanced quarterly, with holdings adjusted to reflect prevailing market trends and relative performance opportunities within the South African listed property sector.

At quarter-end, the fund maintained overweight positions in Emira Property Fund Limited, Fortress REIT Limited, Hyprop Investments Limited, Redefine Properties Limited, and Resilient REIT Limited, reflecting their favourable momentum characteristics and return prospects relative to the benchmark. Conversely, the fund held underweight positions in Lighthouse Capital Limited, MAS Plc, NEPI Rockcastle, Stor-Age Property REIT Limited, and Sirius Real Estate Limited.

The fund remained disciplined in applying its systematic momentum-driven investment process throughout the quarter. By allocating capital toward property counters demonstrating stronger relative performance trends and reducing exposure to those with weaker momentum characteristics, the portfolio seeks to enhance long-term risk-adjusted returns while remaining cognisant of benchmark risk. The portfolio's positioning reflects our continued focus on capturing opportunities within the listed property sector while maintaining a diversified and actively managed exposure to the asset class.

The Palmyra Global Flexible Fund of Funds is managed using a top-down investment process guided by our house view. During the quarter, we increased the fund’s global equity exposure to approximately 86%, while reducing foreign fixed income exposure to 7% and lowering combined ZAR and USD cash holdings to around 7%. This positioning reflects our continued preference for global equities relative to other asset classes.

Within the fixed income portfolio, we maintained a shorter modified duration of 5.1 years relative to the benchmark duration of 6.2 years, reflecting our cautious stance toward interest-rate risk. In June, the U.S. Federal Reserve left interest rates unchanged, maintaining the federal funds target range at 3.50%–3.75%, while signalling its continued commitment to tackling elevated inflation. Market expectations continue to indicate the possibility of a future rate increase should inflationary pressures persist. We will continue to actively manage portfolio duration in response to changes in the global interest-rate environment.

From a geographic perspective, the portfolio remains tilted towards developed market equities and ended the quarter with a modest overweight position in U.S. domiciled equities relative to the MSCI World Index benchmark.

The fund maintained a pro-growth positioning during the quarter, increasing its allocation to global equities while reducing exposure to fixed income and cash. We continue to favour developed-market equities, particularly in the United States, while maintaining a shorter-duration bond allocation to manage interest-rate risk. The portfolio remains diversified and positioned to capture long-term global growth opportunities.