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.
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. ■ email@example.com