NAV on 2020/07/31
|NAV on 2020/07/30
|52 week high on 2019/12/30
|52 week low on 2020/04/06
|Total Expense Ratio on 2020/03/31
|Total Expense Ratio (performance fee) on 2020/03/31
Sanlam Collective Investments
South African--Interest Bearing--Short Term
STeFI Composite Index
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Terebinth SCI Enhanced Income Fund - Jun 19
- The STeFI Index returned 59bps in June, while 3-month JIBAR ended the month 9.2 basis points lower to 7.025%.
- JIBAR is ticking lower in line with forward-rate agreements (FRAs) which are an industry standard for repo rate expectations in the market. The FRA market is pricing certainty of at least one repo rate cut in the next 12 months and over 50% probability of a second rate cut. This is a major shift from the rate hike expectations priced in throughout 2018.
- First quarter GDP contracted by 3.5% q/q which was far worse than consensus expectations of 1.6% q/q contraction. This brings into question the ability for the economy to achieve growth above 1% for the year, unless we see a major rebound in momentum. From a nominal growth perspective, the economy increased by 4.1% y/y (below National Treasuryfs projection of 7.0%) which would have an impact on the budget and current account deficits.
- Consumer inflation increased to 4.5% y/y in May from 4.4% y/y in April which was slightly higher than consensus expectations of 4.4% y/y. Core inflation ticked slightly lower to 4.1% y/y (from 4.2% y/y in April). The slight upside surprise came from higher food inflation (2.8% y/y in May from 2.3% y/y in April) and fuel prices which increased 3.3% m/m (11.6% y/y) in May.
- Retail sales increased 2.4% y/y in April from 0.1% y/y in March which was above consensus expectations of 1.2% y/y. When also considering manufacturing output and electricity production, this is a good start to the second quarter of the year in terms of growth, particularly when considering the GDP slump seen in the first quarter.
- Given the GDP slump, Eskom debacle, stagnant employment and continued contradictory policy rhetoric coming from the ruling party, all eyes were on President Ramaphosa to deliver a State of the Nation Address (SONA) that would hopefully starve off another year of lacklustre growth. This was a missed opportunity with the SONA light on details on Eskom (even though The Presidency promised more details at the SONA) and repeated previous rhetoric of igniting local manufacturing to address the growth issue. The speech was light on new policy initiatives but aimed to focus on implementation with no indication on how the government plans to do things differently.
- June was surprisingly a busy month in terms of credit issuance. We saw the return of issuers that have not participated in the capital markets for a long time such as Telkom, Exxaro and Super Group. This can be an indication of a peaking credit cycle when names that have not issued in the capital markets before or have shied away are able to clear auctions at high bid-to-cover ratios. Other issuers that come to market are BidvestCo, Standard Bank and Growthpoint.
- JIBAR setting is a contentious issue and therefore, although we continue being tactical in receiving fixed rates, where JIBAR sets is an important element in determining total return for comparative floating-rate notes and we monitor developments closely.
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.