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Sanlam Collective Investments
STeFI 6 Month Deposit Rate
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After completing his B.Com degree from the University of Pretoria, Gert joined the South African Reserve Bank as trainee dealer: foreign exchange. He was promoted several times before becoming senior dealer: Capital Market in 1992. He joined Securities Investment Bank in 1993 as dealer: Capital Market before joining SIM in October 1999.
Sanlam Namibia Enhanced Cash comment - Jun 09
During the quarter, the South African Reserve Bank cut its benchmark interest rate by one percentage point to 8.5% at the end of April and by a further one percent to 7.5% in late May. On June 25, the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 7.5%. These interest rate cuts were primarily a result of the economic contraction, slower private sector credit extension and easing money supply data. According to our estimates, inflation will only fall within the 3% to 6% target range by the second quarter of 2010, as services inflation remains sticky. The main risk to inflation will remain the rand.
During the quarter, money market rates fell from highs of 8.8% to 7.5%, while the 12 month rate remained unchanged at 8.35%. This meant the shape of the yield changed dramatically from an inverted curve towards a more positively sloping curve during the quarter. SIM remain neutral on the outlook for short-term interest rates during the quarter, investing only in maturities of between three and six months.
Looking forward, the current 12 month rate of 8.35% is attractive. We expect no major changes in the curve during the next quarter. Preferred areas of investment will be between three and 12 months. We will consider including floating rate notes that reset at three- month Jibar, which are currently trading at a spread of 60 basis points. The next MPC meeting decision will take place on August 13 and we expect the repo rate to remain unchanged, although a case could be made for another 50 basis point cut.
The fund invests in bonds, fixed deposits and other high income earning securities in order to provide a return in excess of money market funds while maintaining a high degree of liquidity and capital preservation. Target duration of 240 days.
This trust's investments are composed in such a way that it is accessible for pension fund investments. (Reg. 28 of the Pension Funds Act).
Why Choose This Fund?
- This fund is ideal for use as a long-term money market fund.
- It is ideal for investors that want more risk in the money market.
- It is ideal for risk-averse investors, or investors who are waiting for market volatility or global uncertainty to subside.
- The fund should produce returns in excess of money market funds.
-The fund pays out income on a monthly basis.