The decline in the value of the rand by more than 10 percent against the United States dollar during the fourth quarter of last year is clearly reflected in the performance of the different asset classes, with the global sub-categories producing the highest returns over the quarter, Sanisha Packirisamy, an economist, and Herman van Papendorp, the head of macro research, at MMI Holdings, say.

Domestic cash out-performed equities and inflation-linked bonds, and because the rand’s depreciation had a negative impact on inflation and interest rate expectations, local bonds and listed property were the worst performers during the fourth quarter, Packirisamy and Van Papendorp say.

Within local equities, non-mining rand-hedge shares strongly out-performed, which was reflected in industrials (6.6 percent) out-performing financials (minus 3.3 percent) and resources (minus 19.2 percent), Packirisamy and Van Papendorp say.

The rand, along with the currencies of other commodity-exporting countries, fell steeply during the fourth quarter because of a confluence of factors, which included the interest rate hike in the US and monetary policy easing in Europe and Japan.

Slowing domestic growth, culminating in negative credit ratings by ratings agencies Fitch and Standard & Poor’s in early December, put additional pressure on the rand, and its vulnerability was fully exposed when Nhlanhla Nene was sacked as finance minister, which showed that the country’s premier fiscal institution was not above political meddling, Packirisamy and Van Papendorp say.

While the South African equity market delivered a nominal return of 5.1 percent and a real (after-inflation) return of 0.2 percent in 2015, Christo Luus, an economist at Third Circle Asset Management, says the equity market’s average real return over five years was 7.1 percent a year, while the average real return over 10 years was 7.8 percent a year.

The real return on bonds in 2015 was a “disastrous” minus 8.4 percent, the lowest annual return since 1994. Average real annual bond returns were 0.6 percent over the past five years and 1.1 percent over the past 10 years.

The real return from cash in 2015 was marginally positive at 0.3 percent, but over five years the average real return was zero, and it was 1.4 percent over 10 years, Luus says. Listed property out-performed both of these asset classes, with real returns of 4.3 percent in 2015, 9.2 percent a year over five years and 9.7 percent a year over 10 years.