NAV on 2019/07/23
|NAV on 2019/07/22
|52 week high on 2019/06/28
|52 week low on 2018/08/01
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
South African--Interest Bearing--Short Term
STeFI Composite Index
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Terebinth SCI Enhanced Income Fund - Mar 19
- The STeFI Composite Index returned 57bps in March, while 3-month JIBAR ended the month again unchanged at 7.15%.
- The key events for the month were backloaded, being the South African Reserve Bank (SARB) interest rate decision and the highly anticipated Moody's Credit Review on the last day of the month. In line with what happened in October 2018, Moody's did not release a Credit Review on the 29 March deadline, but instead released a Credit Opinion on South Africa the following week, leaving South Africa's foreign and local currency credit ratings unchanged at Baa3 with a Stable outlook. Despite developments following the October review - Eskom financial challenges, constrained Fiscal budget, land reform uncertainties - Moody's still assesses South African fiscal strength as Moderate (+) according to its complex rating methodology.
- The Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.75% in a unanimous vote. Throughout 2018, including the more dovish tilted January 2019 meeting, the MPC highlighted that risks to the inflation trajectory remained to the upside, but at the March meeting the tone changed to now note that risks to the inflation outlook are balanced - this is an important shift for policy in our opinion.
- February consumer inflation at 4.1% y/y was in line with consensus forecasts (from January's 4% y/y), continuing the 'four-handle' trend. Core inflation remained unchanged at 4.4% y/y. The main drivers were lower food inflation (2.3% y/y) across the food basket category and limited evidence of Rand weakness passthrough in Rand-sensitive categories. The BER Inflation Expectations Survey for the first quarter of 2019 declined across all social groups from 5.4% to 4.8% for 2019 and for 2020 from 5.4% to 5.2%.
- Despite declining inflation expectations, the SARB's Quarterly Projection Model (QPM) expects one interest rate hike of 25bps by the end of 2019. Another major change in the modelling assumptions is the reduction in GDP growth, which acts to widen the output gap. Monetary Policy must contend with a delicate balancing act where the fixation with anchoring inflation expectations exactly at 4.5% (instead of contentment with lowering inflation expectations) could lead the MPC to retain interest rates (and even consider a hike) when some suggest they should be stimulating the economy with lower interest rates. But this analysis is potentially short-lived as the make-up (and decision-making) of the MPC will change by the end of this year given the end of contracts for two members, while a further two has recently departed.
- March was a busy month in terms of credit issuance. Apart from the regular big bank issuers (FirstRand and Nedbank) and listed property counters (Investec Property Fund and Redefine), we saw State-Owned Companies (SOC's) - IDC, Landbank and DBSA - issuing in the capital markets. Participation was not as robust as we have seen over recent quarters, but it does show that even in the face of corporate governance failures and financial weakness in some SOC's, the well run SOC's that have demonstrated consistency can still tap the capital markets reducing the financial burden to National Treasury.
- We look forward to the May National Elections where the outcome will set the tone for policy setting. Lack of economic growth remains the key impediment to the economy with the bar to change this very low and lies primarily in policy setting and implementation.
The portfolio seeks investment opportunities that meet the objective of delivering an enhanced level of income and stability on capital invested.
The portfolio will invest across the full spectrum of income generating assets including interest bearing securities (including, but not limited to bonds, convertible bonds, debentures, corporate debt, cash deposits and money market instruments) as well as inflation-linked bonds and corporate bonds. The portfolio will be actively managed with exposure to various asset classes to reflect changing economic and market circumstances, in order to maximise returns to investors. For efficient portfolio management purposes, the Manager may invest in financial instruments (listed and unlisted derivatives) allowed by the Act in order to achieve its investment objective.
The portfolio will also invest in participatory interests and other forms of participation in portfolios of collective investment schemes, registered in South Africa and 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 Manager is permitted to invest on behalf of the portfolio in offshore investments as permitted by legislation.
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 the preceding clauses are adhered to; provided that nothing contained in this clause shall preclude the Manager from varying the proportions of securities in terms of changing economic factors or market conditions or from retaining cash in the portfolio and/or placing cash on deposit.