The best of both worlds
are talking down the prospects for equity markets over the next two years, one sector that’s opening up is the fixed income market.
One fund to consider is the Investec Diversified Income Fund, which holds a mixture of South African property, local government and corporate bonds and a mixture of domestic and international unit trusts.
“Credit is our favourite fixed income instrument, not only because you’re earning a very attractive spread of anything from 1,5% to 2% above Government bond yields, but you are getting that at relatively low risk, as the companies are well-managed, recognised businesses with strong brand names,” says André Roux, co-head of global fixed income at Investec Asset Management.
Asked why investors would consider the Diversified Income Fund, Roux said: “What makes the Investec Diversified Fund unique and unusual is that it accesses the best fixed income opportunities in both domestic and offshore markets. Given our globally integrated fixed income team operating from London and Cape Town, we thought it made a lot of sense to create a fund where South African investors are availed of the best of both worlds.”
On top of this, the offshore allocation of the fund is hedged, meaning that investors should not lose capital if the rand strengthens.