Coronation Market Plus Fund

PERFORMANCE

The Fund returned -1.9% for the third quarter of 2026 (Q3) and -2.0% year-to-date. The long-term returns of the Fund remain compelling. Volatility continued in Q3, with news flow and market moves dominated by US macro, sovereign balance sheets and interest rates, the Middle East war, and the artificial intelligence (AI) buildout.

Despite political pressure for lower interest rates, the US Federal Reserve raised rates by 25 basis points (bps) at the tail end of the quarter, following many other central banks in the rate-hiking cycle. Inflationary pressures have persisted globally as high oil prices push their way through global supply chains. While the benchmark rate was hiked in the quarter, this was dwarfed by the market pricing of US Treasuries, which moved the yield on the US 10-year by 81bps up to 5.28%. Bond markets have been sanguine about rising government debt levels over the last few years but are rapidly pricing in a concern we have long held and which is reflected in our zero developed market bond exposure.

The AI trend continues to dominate global equity markets, which are so far shrugging off higher interest rates and ongoing geopolitical crises. Tech-heavy global indexes finished the quarter near all-time highs, with excessive concentration remaining a key theme. As we have been writing for some time, the market is aggressively bidding up the short-term beneficiaries of the AI buildout, while marking down companies that either benefit longer term or are more uncertain. Even those companies that are able to benefit from AI in the future need to invest heavily today, which is impacting short-term earnings and cash flows. This dynamic has persisted in Q3, and we think it is providing us with exceptional stock-picking opportunities globally.

FUND ACTIVITY

Total equity exposure for the Fund ended the quarter at 71.2%.

A key drag on the Fund’s absolute and relative performance over the last 12 months has been our global equity allocation. Many of the shares in our portfolio have fallen victim to the dynamic described above, with meaningful share price declines. Primarily, these businesses have continued to deliver exceptional operating results, and we think they will emerge stronger as a result of adopting AI into their businesses. We have added to both developed and emerging market equities over 2026. On a look-through basis, both categories have near record levels of upside, with the potential for very strong double-digit returns off this base. We anticipate that, as these companies continue to deliver operationally and the market starts to price it in, we will be rewarded for going against the tide and taking the long-term view. In the meantime, volatility and uncertainty will continue to dominate and we must continue to constantly assess the fundamental outlook for these businesses.

Locally, the South African (SA) equity market remained under pressure in the quarter, declining -0.3%. This does mark some intra-period volatility given a very strong August, which was once again driven by precious metals, followed by an unwind into September. The continued decline in the Naspers/Prosus share price, also falling foul of the AI uncertainty trade, weighed on the index and the Fund’s performance as well. Within SA equity, our large buys were Harmony Gold, Prosus, and Gold Fields. Sells were represented by Glencore, Richemont, and AngloGold. AngloGold has been the Fund’s core gold exposure over the last few years, and given the large relative underperformance of Harmony and Gold Fields, we believe there is merit in diversifying our holdings while maintaining our overall underweight position in gold. We used Richemont and Glencore as funding sources after a period of strong performance.

Total bond exposure ended the quarter at 16.2%, with 14.1% in local bonds and the balance in global corporate credit. As mentioned, we hold no developed market debt given our view on government debt levels.

SA bonds were softer in the quarter, with the index returning -0.68% as yields rose globally. We rotated a portion of our inflation-linked bonds into nominal bonds during the quarter as the relative return profile shifted in favour of nominal exposure.

SA property softened a bit in the quarter after a very strong run, with the benchmark index finishing the quarter down -1.5%. Over 12 months, the property index has returned 20.3%, and it has been a key contributor for the Fund given our healthy weighting. At the end of the quarter, local property represented 10.1% of the portfolio. We consider our SA property and SA bond holdings together as both satisfy the yield component of the portfolio. Property, obviously, brings a growing yield which at current valuations stands to deliver continued strong returns.

OUTLOOK

We are cautiously optimistic about the opportunity for long-term returns from today’s starting point. Equity valuations in particular are incredibly compelling, and the Fund has a high weighting in equities as a result. Markets are expected to remain volatile in the short term, given the heavy news flow.

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