Hop­ing for 30 more years of stel­lar per­for­mance

This fund’s pri­mary ob­jec­tive is to achieve a rea­son­able level of cur­rent in­come and sta­bil­ity for cap­i­tal in­vested.

Finweek English Edition - - Contents - By Niel Jou­bert

Fund man­ager in­sights:

In­vestors who are look­ing for sta­ble in­come through the cy­cles in ad­di­tion to low cap­i­tal volatil­ity should con­sider the In­come Fund from Stanlib, says Vic­tor Mpha­phuli, fund man­ager and Stanlib’s co-head of fixed in­ter­est.

“The fund of­fers high cur­rent yield above in­fla­tion with low volatil­ity,” he ex­plains. Ac­cord­ing to him it is a highly di­ver­si­fied port­fo­lio that invests in fixed in­come in­vest­ments such as cash, bonds, pref­er­ence shares, deben­ture stock, deben­ture bonds and money mar­kets. This of­fers a highly pre­dictable level of cur­rent in­come and a mod­er­ate pro­tec­tion of cap­i­tal de­pend­ing on term in­vested.

Mpha­phuli says his team’s in­vest­ment phi­los­o­phy is based on the be­lief that mar­kets are in­ef­fi­cient.

“These in­ef­fi­cien­cies pro­vide in­vest­ment op­por­tu­ni­ties that can be ac­tively ex­ploited to gen­er­ate en­hanced re­turns. Core to this is in­ter­pret­ing the eco­nomic, cor­po­rate as well as sup­ply and de­mand fun­da­men­tals that im­pact the fixed in­ter­est mar­ket,” he adds.

“Through our ex­pe­ri­ence, re­sources and ex­per­tise, we aim to in­crease re­turns by iden­ti­fy­ing di­verse op­por­tu­ni­ties to drive out­per­for­mance.”

In terms of ma­jor trends or events, Mpha­phuli says that they are watch­ing the ac­tiv­i­ties from de­vel­oped mar­kets’ cen­tral banks, led by the US, which is hik­ing rates. Lo­cal pol­i­tics, with the ANC’s elec­tive con­fer­ence in De­cem­ber; rat­ing agency de­ci­sions on the cred­it­wor­thi­ness of SA; and – on the pos­i­tive side – the be­nign in­fla­tion tra­jec­tory, are also fac­tors they will be keep­ing an eye on for the rest of 2017.

Based on the in­fla­tion tra­jec­tory and low growth en­vi­ron­ment, the South African Re­serve Bank will “lean on the cut­ting side”, he be­lieves.

“The fund’s mod­i­fied du­ra­tion has been in­creased to 0.5 years com­pared to 0.2 years when we had the hik­ing cy­cle. This will ben­e­fit the fund as rates de­cline.”

Ac­cord­ing to Mpha­phuli, the fund pro­vides in­vestors with an op­por­tu­nity to earn a good re­turn in a volatile en­vi­ron­ment as a re­sult of the way it is po­si­tioned.

“Due to the un­cer­tainty from other riskier as­set classes, it makes for a great des­ti­na­tion for in­vestors to park their cash be­fore go­ing back into riskier growth as­sets,” he says. “The fund has beaten in­fla­tion over the past 10 years and con­tin­ues to do so.”

Why fin­week would con­sider adding it:

Launched in April 1987, this fund has a long track record of beat­ing the bench­mark and has been “the choice of in­vestors look­ing for su­pe­rior cash re­turns”.

It is man­aged by Stanlib’s award-win­ning fixed in­ter­est team headed by Henk Viljoen and of­fers a high yield with rel­a­tively low volatil­ity.

The fund has beaten the bench­mark over the last one-, three-, five- and 10-year pe­ri­ods and has sig­nif­i­cantly out­per­formed the bench­mark since in­cep­tion. ■ ed­i­to­rial@fin­week.co.za

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