NAV on 2019/01/17
|NAV on 2019/01/16
|52 week high on 2018/03/27
|52 week low on 2018/10/25
|Total Expense Ratio on 2018/09/30
|Total Expense Ratio (performance fee) on 2018/09/30
Prescient Management Company Ltd. (PIM)
South African--Interest Bearing--Variable Term
BEASSA All Bond Index
Guy is Prescient's Chief Investment Strategist and one of its co-founders. After graduation, Guy worked as a bond analyst and manager, and as derivatives specialist at asset management houses including Colonial Mutual, Cape Gilt Investments and Southern Life. At Investec, Guy worked as a bond manager and was responsible for all derivative exposure in the pension funds. He then joined District Securities Bank where he was later appointed a Bank Director, before leaving to establish Prescient Investment Management with Herman Steyn
Prescient Bond Quant Plus Comment - Sept 18
There were two significant events in the money markets last month for South African investors. The first was the MPC's announcement of a hike in the repo rate by 25bps and the second was Fed Chair Powell's announcement that interest rates are now 'just below' the 'broad range' of estimates of neutral. US yields eased some 10 bps during the month. In the case of South Africa, with US 10 year bond yields at 3%, investors require an excess yield of 3% for SA sovereign risk (largely unchanged form a month ago) and an additional excess yield of 2.9% for rand currency risk over a ten-year term. With a 2.9% currency risk premium and assuming purchasing power parity holds in the long term, US inflation expectations of 2% to 2.5% imply a domestic inflation rate in the order of 4.9% to 5.4% - probably towards the low of what can reasonably be expected. What was of interest is that post the Fed comment we have not seen a narrowing in EM sovereign risk premia. EM risk remains elevated as the Fed is still likely to raise rates even though at a slower pace. Also, we have seen high yield credit in both the US and Europe sell off over the last month as risk perceptions rose there. The All Bond Index (ALBI) gained +3.87% for the month. The yield curve shifted down by approximately 40bps across the curve.
The Fund was slightly underweight duration compared to the ALBI. Holdings consisted of credit exposure through banks and State Owned Corporations, in both the bond and cash markets, to take advantage of the additional pick-up in yield. Contributors to performance: Credit exposure and the resulting yield pick-up contributed positively to performance. Detractors from performance: The Fund’s slightly short duration position had a negative impact on performance.
INVESTMENT AND RETURN OBJECTIVE
The Fund aims to generate returns above the JSE All Bond Index over time, utilising active bond management combined with strategies which aim to reduce risk over time.
The Fund invests in cash and high-quality capital market instruments. A number of techniques are used to
generate returns, including duration management, yield enhancements via credit exposure and risk
management strategies, where these strategies are designed to provide downside protection.