Welcome to the Q1 review of Orion Investment Managers, during which the company experienced considerable and encouraging growth. The local asset and investment management companies owned by Orion are:

Cadiz Asset Management, which is a specialist local fixed-income manager.

Starfunds.ai, which is a unique, rule-based quantitative manager.

In February 2025, the Stafunds.ai North America Fund of Funds change its mandate and name to the Starfunds.ai Global Fund of Funds. The benchmark of the fund is now the MSCI World TR Index, denominated in USD. The change of fund name was seamless with no client interaction required.

Accorn Investment Management is a long-only, equity and multi-asset manager.

Palmyra Asset Management is focussed on local equity, property and multi-asset funds.

Capita Asset Management manages long-only, equity and multi-asset funds.

Investin Asset Management, who manage long-only, equity and multi-asset funds.

International Personal Share Portfolio (PSP) Changes.

As communicated previously, we made substantial changes to our international PSP models for our clients invested via Canaccord and PCS Old Mutual, these changes have meant that the performance of our international share portfolios has improved relative to their respective benchmarks over the last quarter.

To recap, the changes we implemented were changing the direct global equity to the Martello global model and adding exposure to a US ETF, weights noted below:

• International Flexible PSP Model 1: 20% iShares Core S&P 500 ETF
• International Flexible PSP Model 2: 25% iShares Core S&P 500 ETF
• International Balanced PSP Model 1: 12% iShares Core S&P 500 ETF
• International Balanced PSP Model 2: 15% iShares Core S&P 500 ETF

Due to the Trump ‘tariff tantrum’ impacting policy uncertainty surrounding the ‘on-again/off again’ tariffs together with renewed US recession fears, inflation concerns, weaker consumer sentiment and heady equity valuations, Accorn elected to diversify our client’s exposure to ETFs by adding the iShares MSCI World ETF. The total exposure to ETFs was unchanged, but we rebalanced the weights as follows: 60% iShares MSCI and 40% iShares Core S&P 500 ETF. Please note that this change was not applied to any International PSPs where a Discretion Limitation Addendum (DLA) prohibits such adjustments.

The allocation to the iShares Core S&P 500 and iShares MSCI World ETFs is aimed at reducing the direct equity allocation within the portfolios while maintaining the overall equity weight in the four models. The change of weights of the ETFs reduces our international PSPs geographic allocation to the US without specifically upweighting any direct equity.

The inclusion and the model weights of the ETFs is reviewed periodically and may change depending on market conditions.

On behalf of the Orion Investment Managers Team, I would like to thank Warwick for the business invested in our funds and portfolios during the first quarter of 2025 and we look forward to your continued support during the year.

We now provide a market overview.

Since the second Trump presidency, US markets have underperformed on a quarterly and monthly basis. In March, the Nasdaq was the worst performing index in the US, losing 8.2% for the month, with the S&P 500 losing 5.8%, and the Dow weaker by 4.2%.

The UK market also endured a weaker March, with the FTSE 100 ending the month lower by 2.6%, as UK inflation for February printed at 2.8% YoY, slowing from the January print of 3.0% YoY, with core inflation also down from the January print of 3.7% YoY to 3.5% YoY in February.

Major European markets also ended the month on the back foot for the first time in 2025, highlighting the negative impact of the Trump tariffs. There is some optimism, however, and Europe is being viewed as an attractive investment alternative to the US. The German Dax closed the month weaker by 1.7%, while the Cac in France closed lower by 4.0%. Inflation in the Eurozone in February eased to 2.3% YoY, compared to the January print of 2.5%, with core inflation printing at its lowest level since January 2022, coming in at 2.6% YoY.

While the US imposed auto tariffs caused some initial concern, this did not dampen Asian markets, with positive policy signals from Beijing adding to the hope of new technological innovations. The Hang Seng closed marginally higher, up 0.8% for the month, and the Shanghai Composite up 0.4% for the month.

In Japan, the Nikkei ended the month lower by 4.1%, as concerns around the impact of the Trump tariffs on the Japanese economy. Japanese core inflation for February printed at 3.0%, lower than the January print of 3.2%, surpassing market expectations, but reinforcing concerns about persistent price pressures.

South Africa

On the local front, on the back of the anxiety cause by the Trump tariffs, we saw a flight to quality and safety with resources being the star performers on the market, with gold and platinum counters shining. The All-Share Index also closed the month 3.1% higher, ending at an all-time high of 90,149.7 on March 19. Resources ended the month higher by 19.5% with the gold price jumping 9.3%, with platinum up 5.1%, palladium up 7.4% and rhodium up 20.6% leading the gains.

The Minister of Finance finally tabled the 2025 Budget, with the key highlight being a more moderate 0.5% increase in VAT, compared to the previously proposed 2.0% hike. Under legal and political challenges this 0.5% VAT increase was subsequently withdrawn, and we await a revised budget framework and legislation to be introduced into Parliament in May.

In other domestic news, the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) left the repo rate unchanged at 7.50% during its March meeting, in line with expectations.

Local CPI inflation remained steady in February at 3.2% year-on-year (0.9% month-on-month), still well below the target midpoint of 4.5% YoY. Despite this, it was a month of relatively high price pressures according to the surveyed data. Core inflation, which excludes food, non-alcoholic beverages, fuel, and energy prices, dropped slightly to 3.4% YoY in February from 3.5% in January, reflecting the moderate nature of underlying inflation in South Africa.

The Rand has experienced some weakness against the Euro since the start of this year, at R19.58/EUR, reaching R19.90/EUR by the middle of March. The local currency has been particularly volatile against the US dollar, at R19.23/USD in mid-January, but at that stage market expectations for US interest rate cuts had been largely factored out for this year. More recently, however, markets have factored them back in. The Rand eventually ended the quarter at R18.32/USD.

Strategic Asset Allocation

Our overweight exposure to South African nominal bonds was reduced to neutral and we shortened our duration to neutral relative to the All-Bond Index. Bond yields look attractive, but have blown out to ~11% for a generic 10-year bond.

We are neutral on property after the property index’s strong rally in 2024, however, we did take some profits during Q1, and our new weight is 5% for our balanced mandates. Property fundamentals remain attractive as we move through the local rate cutting cycle.

We remain positive on local equities and have maintained an overweight exposure. Our equity allocation is overweight industrials, underweight financials, and broadly neutral resources relative to their JSE Capped Swix All Share Index weights.

Looking at our international asset allocation, we remain underweight cash even though we expect developed market interest rates not to be cut as aggressively as originally anticipated and our preference remains global equities over bonds.

We are neutral global bonds with the expectation of only two rate cuts in the US during 2025, probably only in the second half of the year. Considering this, we reduced our exposure to longer duration bonds (the 15–20-year bucket) and are now shorter duration when compared to our benchmark which is the Bloomberg Global Aggregate Index.

We remained neutral on international equity. However, we took the decision to increase our global equity exposure, from 30% to 32% for our balanced mandates and from 15% to 16% in our low equity stable mandates. We prefer exposure to DM over EM and remain marginally overweight to the US.

We are focused on protecting our clients from permanent capital loss by investing in good quality businesses with strong cash-flow generation and low leverage, combined with more reasonably valued structural growth stories.

Remember that markets can be volatile over the short-term, and as history has shown, those who are willing to be patient and invest for the long-term will be handsomely rewarded.

In the meantime, I wish everyone in the Group a successful second quarter of 2025 and look forward to speaking to you in the coming weeks.