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Sanlam Fixed Interest team tops

07-02-2018

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Two Sanlam portfolio managers brought home awards for being the top performers in their fund categories following the 22nd Raging Bull Awards ceremony held in Cape Town this week. The prestigious Raging Bull Awards ceremony recognises the top managers in the South African unit trust industry, measured on their long-term performance. Awards for asset-specific categories of funds are based mainly on straight performance, calculated by Profile Data for the three-year period to end 2017. The winners were the Sanlam Investment Management (SIM) Enhanced Yield Fund and the Sanlam Global Property Fund.

The Sanlam Global Property Fund allows investors to participate in global property market opportunities through investment in a diversified portfolio of quality listed property securities across the globe. The Fund follows an active fundamental research driven investment approach through a combination of quantitative and qualitative insights to identify opportunities. It is managed by AllianceBernstein Investment Management.

The SIM Enhanced Yield Fund is actively managed by Melville du Plessis, a Chartered Financial Analyst (CFA), and also a certified Financial Risk Manager and Chartered Alternative Investment Analyst.

SIM Enhanced Yield Fund a consistent winner

The SIM Enhanced Yield Fund is no stranger at the Raging Bulls Awards ceremony, demonstrating the consistency of the Fund’s performance. It was named the best SA Interest-Bearing Short-Term Fund at three of the past four years’ events! It received the honour of being first in its category for the three years to the end of 2014, 2016 and 2017 respectively.

On top of this achievement, the SIM Enhanced Yield Fund was also the top performer across all pure fixed interest unit trust categories over the past three and five years to end 2017. This means it has given the best return of all funds in the SA Interest-Bearing Money Market, Short-Term and Variable categories.

Du Plessis says the track record of the fund demonstrates its ability to outperform during increasing and decreasing interest rate cycles, as well as in favourable and unfavourable credit market environments. Its benchmark is the STeFI + 0.5%, but since its launch in May 2011 the SIM Enhanced Yield Fund has beaten the STeFI by 1.46% p.a., which is an unusually large outperformance for a fixed interest fund limited to cash, government, corporate and inflation-linked bonds.

A higher yield than money market for short-term savings

Investors who are saving for a short-term goal or who need quick access to their money, for example in the case of a ‘rainy day’ fund, are often looking for a better return than that offered by a money market fund. The SIM Enhanced Yield Fund aims to offer just that by taking advantage of a wide range of interest-bearing instruments.

Yield enhancement is pursued by using a combination of interest rate strategies and credit opportunities. Credit contributed more of outperformance on a relative basis during the last year, but the amount of value added by interest rate management and credit respectively was still relatively balanced during 2017. Over the long term the contribution of these two categories can also be expected to be relatively equal. Although it’s impossible to have perfect foresight with regards to what the future holds, Du Plessis believes that appropriate risk management and avoiding undue concentration risk is one of the most efficient ways to avoid underperformance. The fund’s highest and lowest annual returns since launch have been 9.4% and 5.6% respectively.

All SIM’s funds are driven by the house view process, and the awards reaped by the SIM Enhanced Yield Fund is testament to SIM’s superior fixed interest capabilities.

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