A key focus of STANLIB’s Fixed Income team is on the credit quality of the underlying investments within the Fund.

The credit quality of the STANLIB Income Fund remains high. Most of the underlying instruments in the STANLIB Income Fund are rated AA or AAA. The fund is currently relatively conservatively positioned from a credit perspective, recognising the uncertain environment.

For a portfolio manager liquidity is a valuable attribute in any asset so less liquid assets are priced at a discount; in the world of fixed income, cheaper assets mean higher yields. This means that a fund manager can achieve higher returns by investing in assets which are harder to sell but the risk of the portfolio must increase in the process. STANLIB’s mission is to achieve strong risk-adjusted returns for our investors: we seek the greatest return available for a given level of risk. The Income Fund’s managers invest actively, buying and selling assets to optimise the Fund’s duration and credit profile in response to events; maintaining a liquid portfolio is therefore an essential part of their philosophy.

By only investing in liquid assets the managers know they have the flexibility to rapidly change the fund’s allocations when required – unlike the liquidity opportunity cost of, for example, fixed term investments.

Fund highlights

• The STANLIB Income Fund aims to deliver stable income and returns in excess of cash, while preserving investors’ capital. Our portfolio managers achieve this by allocating across a wide range of fixed income instruments and actively managing the Fund’s duration based on their expert view of South African interest rates.
• The Fund is an excellent alternative to cash and money market funds for investors with a longer time horizon, offering better returns with minimal incremental risk.
• It is also a good option for investors considering fixed rate opportunities. Not only are its forward yields strong but it offers liquidity and capital appreciation while reaping the benefits of compounding.
• The Fund is an ideal pre- and post-retirement income solution.

Investors in the fund benefit from STANLIB’s dominant position in South African fixed income, the experience and diversity of our portfolio managers and their access to global insights through STANLIB’s strategic partnership with J.P. Morgan Asset Management.

The Fund’s managers build a high-quality, fully diversified portfolio from the widest range of fixed income investments and then manage it actively, pursuing opportunities as they arise while carefully managing risk. During continued market uncertainty, against a backdrop of high inflation, rising interest rates and low growth, we remain close to markets and nimble in our tactical approach.