Standard Bank Eswatini has announced a strong finish to the 2025 fiscal year, with its Managed Unit Trust delivering an estimated total return of 3.2% for the fourth quarter. This is according to the quarterly update as of 31 December 2025, provided by Marius Oberholzer, Head of Multi-Asset.
This performance caps off a stellar year for the Fund, which achieved a cumulative full-year return of 13%. This outcome is attributed to a strong global risk environment, where the Fund was positioned to participate in equity market upside while maintaining a balanced and diversified portfolio.
“Following the powerful rally in the third quarter, we maintained a constructive stance in Q4, retaining meaningful exposure to growth assets while remaining selective in implementation. Portfolio positioning continued to focus on balancing participation in global and regional equity markets with diversification across asset classes, supported by active currency management,” said Oberholzer.
South African equities acted as a significant engine for growth during the final quarter of the year. “They benefited from strength in resource counters as precious metals extended their recovery. Exposure to gold miners added value, while platinum group metals rebounded,” he said.
On the domestic front, South African shares remained positive in absolute terms, supported by the banking sector and selected industrials, even as general retailers faced ongoing pressure. “Our positioning reflects a medium-term view that incremental reform progress, improving energy stability, and a very low growth base can support earnings recovery over time,” Oberholzer noted.
On the international stage, offshore equities delivered positive underlying performance, led by exposure to US technology, Japan, and global defence companies.
“We reduced exposure to underperforming Hong Kong technology positions, demonstrating discipline amid elevated volatility, while maintaining selective exposure where fundamentals remained supportive,” Oberholzer explained. “The decision earlier in the year to increase exposure to Japan, based on expectations of Yen weakness and ongoing corporate reform, continued to contribute positively.”
Fixed income holdings again made a stable contribution during the quarter, benefiting from attractive real yields and easing inflation dynamics. These exposures played a critical role in anchoring portfolio returns during a period marked by notable currency movements.
“The stronger Lilangeni reduced the translation of offshore returns into local currency terms in the quarter. However, this impact was largely mitigated through active currency hedges, which helped to offset the drag from currency strength on offshore equity, bond, and cash exposures,” he said.
Looking ahead, the bank maintains a cautious but constructive stance, acknowledging that “the path into 2026 is unlikely to be linear.” With equity valuations currently elevated, risk assets have become increasingly sensitive to disappointments in growth or liquidity.
“Our tactical positioning is skewed toward risk-taking assets. Our two positive market scenarios together account for a 66% probability, with the ‘Goldilocks’ scenario currently carrying the highest weight at 40%,” Oberholzer said. This scenario assumes reasonable growth without disruptive inflation pressures.
However, he warned that while recession risks have receded, they have not disappeared. The bank continues to monitor the potential for a more aggressive stance from the Federal Reserve through their “Hawkish Hiccup” scenario, where sticky inflation in services and wages could keep policy rates restrictive for longer than anticipated.
Despite these headwinds, Oberholzer expects 2026 to be “broadly supportive for equities,” driven by constructive earnings momentum. Nevertheless, the bank remains selective in geographic preferences, favouring Developed Markets over Emerging Markets due to weak domestic demand in China.
In South Africa, the outlook remains constructive with a strategic bias towards financials. “A key local risk is market concentration, with resources continuing to dominate market-cap-weighted indices,” Oberholzer concluded. “We are actively managing this exposure and would prefer to see broader participation from currently under-owned sectors as we move into 2026.”