NAV on 2019/07/19
|NAV on 2019/07/18
|52 week high on 2019/06/27
|52 week low on 2019/01/02
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
STANLIB Collective Investments (RF) Limited
South African--Interest Bearing--Short Term
BEASSA 1 to 3 year Bond Index
Victor joined SCMB Treasury in 1996 as a trainee dealer in the foreign exchange markets and later moved to Nedcor Investment Bank as a capital markets dealer. In early 2001, he joined Libam's fixed interest team as a capital markets dealer and assistant to Henk Viljoen.
Standard Bank Fundisa comment - Mar 19
The size of the fund remained flat during the quarter at R209 million. Three-month Jibar held at 7.15% throughout the first quarter of 2019. Income fund returns are still compelling compared with cash which makes the fund attractive, especially in a period of elevated volatility.
In the first quarter of 2019 there were a number of key risk events, starting with the Budget speech when the Finance Minister presented worsening fiscal projections. The budget showed debt to GDP figures exceeding 60% in the medium term along with R69 billion support needed for financially distressed Eskom over the next three years. The cash injection came at a much-needed time, as Eskom was allocated a lower tariff increase by NERSA than it applied for and the power utility was also reaching a point where it was unable to service its debt. This, with loadshedding, contributed to weaker business confidence. Credit rating agency Moody’s gave SA a rating reprieve by deciding not to issue a sovereign credit review on 29 March, but later issued a credit opinion affirming SA’s credit rating at Baa3 with a stable outlook. The credit opinion mostly highlighted positives, causing markets to rally, with the SA benchmark bond yield reaching a low of 8.42% for the quarter and the rand strengthening to R14.15/$ from a low of R14.60/$. The five-year credit default swap (CDS) spread consolidated to 185bps, down from 227bps at the beginning of Q1 2019, but still higher than the low of 140bps seen in 2018. Despite volatility, the bond market managed to produce a return of 3.76% during Q1 2019.
At its December meeting, the US Fed emphasised slowing global growth and benign inflation, which encouraged it to pause from hiking interest rates and announce an early end to its balance sheet reduction in Q3 2019. The Fed’s changed stance, along with other global central banks remaining accommodative, has rallied high-yield emerging markets. The US 10-year bond yield has since strengthened to 2.37% following a high of 2.75% earlier during the quarter. However this caused the US yield curve to invert, which raised concerns of a possible recession in future. In line with a benign global inflation outlook, inflation data in SA remained subdued, supporting the bond market.
The market will be closely watching the national elections taking place on 8 May and the outcome may influence direction. The risk of an imminent sovereign downgrade may have subsided but it is not completely ruled out as Moody’s continues to monitor the turnaround in SA growth and fiscal metrics. Moreover, Moody’s rating review of the SA sovereign scheduled for November will consider the structural reforms undertaken at financially troubled state-owned companies such as Eskom. Inflation in SA is expected to remain stable inside the target band of 3-6% and the SARB is likely to keep rates on hold for the year.
The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.
The Standard Bank Fundisa Fund shall be a feeder fund portfolio.
The investment objective of the Standard Bank Fundisa Fund is to achieve an investment medium for investors, which shall have as its primary objectives a reasonable level of current income and the maximum preservation of capital invested.
Apart from assets in liquid form, the underlying assets will consist solely of participatory interests in a single portfolio of a collective investment scheme located in the Republic of South Africa and approved by the Registrar, namely the Central Fundisa Fund managed by STANLIB Collective Investments Ltd. The underlying assets of this last mentioned portfolio will consist apart from assets in liquid form, solely of participatory interests of collective investment schemes of fixed-interest income orientated portfolios of collective investment schemes registered in Republic of South Africa as permitted in terms of the hosting agreement with the Association of Collective Investments ('ACI'), the 'Fundisa Fund' trademark holder or any other association that may replace the ACI and who is the legal owner of the 'Fundisa Fund' trademark.
For the purpose of the Standard Bank Fundisa Fund, the manager shall reserve the right to close the portfolio to new investors on a date determined by the manager. This will be done to enable the manager to administer the portfolio in accordance with its mandate. The manager may in its discretion, open the portfolio again to new investors on a date determined by the manager.
The trustee shall ensure that the investment policy set out in the supplemental deed is carried out.