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96.98

NAV on 2019/09/13
NAV on 2019/09/12 96.99
52 week high on 2019/09/12 96.99
52 week low on 2018/10/25 88.61
Total Expense Ratio on 2019/06/30 0.43
Total Expense Ratio (performance fee) on 2019/06/30 0
NAV Incl Dividends
1 month change 3.25% 3.25%
3 month change 4.18% 4.18%
6 month change 1.58% 6.05%
1 year change 3.81% 13.22%
5 year change 0% 0%
10 year change 0% 0%
Price data is updated once a day.
  • Sectoral allocations
Gilts 666.33 99.26%
Liquid Assets 4.95 0.74%
  • Top five holdings
  • Performance against peers
  • Fund data  
Management company:
Sygnia Collective Investments RF (Pty) Ltd
Formation date:
2015/02/20
ISIN code:
ZAE000201513
Short name:
U-SALLBON
Risk:
Unknown
Sector:
South African--Interest Bearing--Variable Term
Benchmark:
JSE All Bond Composite Index (ALBI).
Contact details

Email
info@sygnia.co.za

Website
www.SYGNIA.co.za

Telephone
021-446-4940

  • Fund management  
Iain Anderson


  • Fund manager's comment

Sygnia All Bond Index Fund - Jun 19

2019/08/29 00:00:00
MARKET PERFORMANCE
Developed-market central-bank policy easing has contributed to the longest-ever economic expansion - over 10 years. Global monetary policy easing reached new highs as the universe of negative-yielding bonds jumped to a record $13tn, gold to six-year highs and the S&P500 to all-time highs. Both the US Fed and ECB vowed to cut rates if necessary. The Bank of Japan has continued to ease monetary policy, because, on the back of trade tensions, global-manufacturing confidence indices have fallen into contraction, Citi’s Global Economic Surprise Index has experienced the longest period of disappointing economic data on record and the Brent crude oil price dropped 20%. Amid escalating disputes, the World Bank downgraded its global growth outlook to the weakest pace in three years, forecasting 2.6% this year. The largest threat to the economic outlook is U.S. President Donald Trump’s trade and tech wars, the latter being of particular concern, as 27% of the S&P500 Tech sector’s revenue is exposed to China. Trump has an incentive to keep the market buoyant with 2020 elections around the corner, but the risk of miscalculation is high when using untested tools. Trump said that his meeting with China’s President Xi Jinping at the G20 leaders’ summit in Osaka went far better than expected and that he would not increase tariffs. He added, however, that he was 'in no hurry' to cut a trade deal.
South Africa’s Q1 GDP fell the most in a decade, down 3.2% on the back of loadshedding issues. Seven of nine areas of the economy are in decline: agriculture declined a massive 13%, with farmers still unsure of their property rights, and mining was down 10% on power concerns. The rand lost considerable ground, breaking above R15 to the USD, and the yield curve rose to its steepest levels on record in response to a statement by ANC Secretary-General Ace Magashule that the organisation had decided to change the Reserve Bank mandate and begin 'quantity' easing. The ANC’s economic transformation head, Enoch Godongwana, SARB governor Lesetja Kganyago, Finance Minister Tito Mboweni and President Cyril Ramaphosa confirmed that the party would not seek to nationalise the central bank nor expand its mandate. The South African Chamber of Commerce expressed concern that the government is 'at war with itself'. The debt market is concerned about continuing to fund state-owned enterprises, after Ramaphosa announced more front-end loaded support for Eskom in his State of the Nation address. Inflation rose to 4.5% in May, but the SARB’s forecasting model suggests there is room for interest rate cuts. The IHS Markit US manufacturing purchasing managers index (PMI) declined to 50.1, its lowest level since September 2009, and consumer confidence is at two-year lows. The Fed cut its inflation forecast and suggested a rate cut could happen as early as July unless trade tensions and economic data improve. The 10-year Treasury note yield fell below 2% as US rates markets moved to price in roughly three rate cuts from the Federal Open Market Committee (FOMC) in 2019. This aggressive move is normally only associated with an economic recession, but the Fed is changing the reaction function that will encourage an inflation overshoot.
Eurozone inflation expectations plunged to a record low (1.1% on the five-year forward rate) as investors worry that the economy is slipping into 'Japanification', an inescapable period of stagnant growth and low interest rates. Unsatisfied with the market’s view, Mario Draghi, President of the ECB, announced possible interest rates cuts and a fresh round of bond purchases. The TLTRO-III stimulus programme will start in September, and tax cuts have been announced in some of the major economies.
After three years of political deadlock over Brexit, the ruling Conservative Party is picking a new leader. Boris Johnson is the favourite to succeed Prime Minister Theresa May, and the new prime minister should be in place by the end of July. Johnson vowed to deliver Brexit with or without a deal. Brussels has underlined that it will not reopen Britain’s EU withdrawal deal, stressing that the next prime minister should honour the deal that Theresa May brokered.
China’s central bank added 500 billion yuan ($72 billion) to the financial system, the second-largest injection on record. The financial support was required after the government’s first seizure of a bank in more than two decades drove up funding costs. The Chinese services sector is holding up well despite a slowing manufacturing sector (Chinese factory output slowed to its weakest pace on record), and infrastructure investment is being encouraged in order to ensure growth does not slow beyond the government’s 'reasonable range'.
India’s central bank cut its benchmark interest rate for the third time this year, to 5.75%, the lowest level in nine years, and signalled the possibility of further easing in a bid to support growth. However, the central bank suffered a blow to its credibility after the resignation of deputy governor Viral Acharya.
Russia’s central bank cut the key interest rate and hinted at future reductions.Australia’s central bank cut interest rates to a record low of 1.25%.
Fitch and Moody downgraded Mexico’s credit rating against the backdrop of rising trade tensions. Fortunately, President Trump 'indefinitely suspended' his plans for U.S. tariffs on Mexico, removing the threat of a 5% tariff on Mexican imports.
Turkey’s opposition party, the Republican People’s Party, secured 54.2% of the vote in a re-run Istanbul mayoral election, striking a blow to President Tayyip Erdogan.
FUND PERFORMANCE
The Sygnia All Bond Index Fund tracked the composition of the JSE All Bond Composite Index (ALBI) during the quarter, in line with its investment objective, and delivered a return of 3.60%. Foreigners returned to being sellers of local bonds in the second quarter of 2019 and sold approximately R14bn nominal worth of South African government bonds versus the R11bn bought in the first quarter of 2019. This brings the net selling to R3bn over the first half of the year. The modified duration of the fund decreased from the 7.27 level at the end of March to 7.14 at the end of June 2019, in line with the duration of the ALBI at 7.12. The yield on the R186 government bond ended the quarter sharply lower from 8.60% in March, to 8.09% at the end of June. However, this does not tell the full story of the move in the yield curve, which steepened dramatically, with the yield of the longer-dated R2048 bond only coming down from 9.71% to 9.67% over the quarter.
There were no changes to the index constituents during the quarter, but the ES26 bond moved from the 7-to-12-year to the 3-to-7-year sector. The biggest credit spread move came from the DV23 (Development Bank of SA) bond, which ended the quarter 6 basis points tighter, moving from a spread of 100 to 94 basis points over the R2023 government bond.
  • Fund focus and objective  
The composition of the Portfolio will be compared to the composition of the Index on a daily basis, taking into account any new investment contributions or withdrawals to and from the Portfolio, the receipt of any coupon payments for reinvestment, the effect of any corporate actions and its impact on the composition of the Portfolio relative to that of the Index. A tracking error minimising algorithm is used to determine the least number of transactions required to keep the Portfolio's returns aligned as closely as practically possible to the Index's returns while at the same time keeping the trading costs in the Portfolio to a minimum. The tracking error will never exceed 2% (two percent) on an annual basis. All cash movements and instrument events are taken into account daily in order to re-align the Portfolio to match the returns of the Index as closely as practically possible. The portfolio will invest in assets in liquid form, and in high yielding non-equity securities and interest bearing securities including but not limited to public, parastatel, municipal and corporate bonds, inflation linked bonds, loan stock, debentures, fixed deposits and money market instruments. When investing in derivatives, the Manager will adhere to prevailing derivative regulations. The portfolio manager will invest in derivatives for cash flow management purposes, as this is more cost effective, and to enable the investment manager to achieve the objective of tracking the Index more effectively.
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