NAV on 2019/09/16
|NAV on 2019/09/13
|52 week high on 2019/09/16
|52 week low on 2018/10/05
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Sanlam Collective Investments
South African--Multi Asset--Income
110% of STeFI Call
No email address listed.
No website listed.
Northstar SCI Income Fund - Jun 19
The Northstar Income Fund performed well over the last quarter with a 2.6% return vs. the benchmark return of 1.8%. The fund performance relative to the benchmark also compares favorably over 1 year (9.7% vs. 7.3%) and 3 years (8.3% vs. 7.4% annualised). Over the last 3 years, the Northstar Income Fund has displayed low risk characteristics with a maximum drawdown of 0.46% and a standard deviation of 1.3%. In addition, the portiolio's current holdings have a weighted average credit rating of Aa2. Over the last 3 years, the Northstar Income fund has realised an annualised real return of 3.6%.
During the quarter, the portfolio has been underweight listed property (1.1% vs. the strategic benchmark weighting of 5%) which has been a small detractor to returns, with the sector returning 4.5%. On an absolute basis, the foreign cash and bond holdings detracted from returns as a result of the USD and other developed market currencies weakening by +/2% vs the ZAR. Conversely, the portfolio's overweight positions in fixed and inflation linked corporate bonds contributed 1.22% and 0.91% respectively. The balance of returns were achieved with holdings in NCDs and floating rate notes which each contributed 0.41%. Global factors have been the primary driver of local fixed income pricing over the last quarter. Global inflation remains benign and growth is waning, which has prompted central banks to consider lowering interest rates. As a result, global investors have dropped their return requirements and driven yields lower. Despite South Africa's deteriorating debt profile, dire growth prospects and lackluster policy improvements, local yields have been too attractive to ignore. Consequently investors have been comfortable buying the R186 (SA 7½year maturity) on yields of 9.35% all the way down to around 8%.
Inflation across developed markets is anticipated to remain below 2%, with the exception of the US where consumer prices may reach 2.1% in 2020. Despite multi decade low unemployment of 3.7%, the Fed has signaled potential rate cuts, on the back of a slowing economy and benign inflation pressures. The ECB is likely to follow suit, with Mario Draghi indicating the need for monetary stimulus in the event of no improvements in the economy. These concerns are reflected in the depressed consensus GDP forecasts, with developed markets set to grow at 1.6% in 2020, post the 2% plus growth during the last 3 years. The US has been performing well with growth of 2.9% in 2018, however US real GDP is expected to slow to 1.8% over the next couple of years. Growth in Europe and the UK is likely to be even more subdued. Conversely, growth in Eastern Europe and emerging markets is expected to remain reasonably buoyant.
On the local front, severe electricity supply disruptions, weak business confidence, policy uncertainty, escalating debt, increased debt costs, an overtaxed consumer and ongoing corruption resulted in a sharp decline of 3.2% in real GDP for Q119. With no quick fixes in sight, SA growth is likely to muddle behind other emerging market peers with anticipated growth of 1.8% vs. the 4.8% average for emerging markets over the next couple of years. On a forward looking basis, local inflation is expected to average 5%, which is comfortably within the target band 3% to 6% set by the SARB. In addition, the SARB remains an independent body with a clear mandate to ensure price stability. Should developed markets embark on further monetary stimulus, it is reasonable to expect the SARB to do the same. Room for SARB action however, will remain restricted given the wide range of alternative investment destinations offering better growth opportunities with even lower inflation rates. On this basis, the Northstar Income Fund maintains a broad range of fixed income assets with the aim of achieving a reasonable real return over time. The fixed bond weighting is being reduced as yields decline. Likewise, global currency exposure is being marginally increased as the Rand approaches fair value, to ensure sufficient capital protection in the event of any unforeseen South African or emerging market related risk event. The inflation linked bond weighting has been increased marginally above the strategic level, as 5year real yields have cleared handsomely above our hurdle rate. The balance of capital, realised from reduced fixed bond exposure, has been allocated to a range of NCDs and floating rate notes, resulting in overall lower portfolio duration.
The Northstar Sanlam Collective Investments Income Fund is an income portfolio with an objective to provide investors with a regular and stable income that targets inflation beating returns over the long term, while actively managing the risk of capital loss in the short term Investments to be included in the portfolio may, apart from assets in liquid form, consist of equity and non-equity securities, fixed interest instruments (including, but not limited to, bonds, corporate bonds, inflation linked bonds, convertible bonds, cash deposits and money market instruments), debentures, preference shares and property securities as well as any other income enhancing securities which are considered consistent with the portfolio's primary objective and that the Act may allow from time to time. The portfolio's equity exposure will be limited a maximum of 10% of the portfolio's asset value.The portfolio may from time to time invest in financial instruments, in accordance with the provisions of the Act and applicable legislation, as amended from time to time, in order to achieve the portfolio's investment objective. The manager may also include forward currency, interest rate and exchange rate swap transactions for efficient portfolio management purposes.The Manager may include participatory interests and other forms of participation of local and global collective investment schemes, or other similar schemes operated in territories with a regulatory environment which is to the satisfaction of the manager and trustee of a sufficient standard to provide investor protection at least equivalent to that in South Africa and which is consistent with the portfolio's primary objective. The Fund will be managed within the requirements of retirement funds prudential investment guidelines as well as the requirements of the Act. For the purpose of this portfolio, the manager shall reserve the right to close the portfolio to new investors on a date determined by the manager. This will be done in order to be able to manage the portfolio in accordance with its mandate. The manager may, once a portfolio has been closed, open that portfolio again to new investors on a date determined by the manager. The Trustee shall ensure that the investment policy set out in this Supplemental Deed is carried out.