Download Fixed Interest Portfolio - Absa | Wealth And Investment Management

Investments
Fixed Interest Portfolio
As at 30 June 2013
Portfolio facts
Portfolio objectives
Type
Income asset class structure
Performance target
CPI Inflation, Money Markets funds,
Income funds
Portfolio manager
Craig Pheiffer
Gary Smith
Trevor O’Callaghan
Jacques Theron
Paul Steven
Lance Gordon
Qualifications
FSB-approved Portfolio Managers
Asset management
company
Absa Asset Management Private Clients
Mandate
Institutional/Trust/Private Client
Contact
Susan Buys (011) 647 0874
Bronwen de Klerk (011) 647 0827
Laurna Edwards (011) 647 0860
The Fixed Interest Portfolio invests primarily in domestic fixed interest rate
securities (Bonds, NCDs). The Absa Money Market Fund is included to provide liquidity. This portfolio is ideal for clients who are concerned about income and are looking for a shorter-term money management solution. Capital
is not guaranteed, mainly due to the bond portion of the portfolio being subject to market price fluctuations. To apply fixed-rate investments of differing
maturities to provide income stability and a yield advantage over money
market rates over a medium-term time horizon. There is flexibility to move
between instruments of differing maturities. Typically, a bar-bell structure is
used to provide about one-half at a long-term fixed rate (more than 12
months) and one-half at a short-term fixed rate (less than 6 months). The
duration of this portfolio is about 2 years.
Risk profile and advisable minimum term
Low
Minimum investment
R 5 000 000
Income
Reinvested or paid out at the client’s
discretion
Current yield
Medium
Medium-High
Medium
Term
Medium to Long
Term
Short to
Medium Term
Portfolio fees
Management fee
0.40% p.a. (VAT excl.)
Minimum fee
R20 000 p.a. (excl. VAT)
Upfront fee
Negotiable
Brokerage
Bond scale where applicable
Weighted portfolio yield: 5.7%
Representative performance to 30 June 2013 (%)
Advantage: This portfolio should sustain a relatively higher yield
Parameters
Restricted to minimum AA-rated financial institutions’ treasury
instruments and AA-rated Bond Exchange of SA listed bonds. The
yields and hence the market values may fluctuate.
Long Term
X
Absa Money Market Fund = 4.9%, NCDs 3-6 mnths = 5.2%,
NCDs 12 mnths = 5.8%, Bonds (YTM) = 6.0%.
over cash in the medium term, whether official interest rates remain flat, are cut or are raised.
High
X
Short Term
Portfolio details
Low-Medium
One year
Three years
(cmpd p.a.)
Five years
(cmpd p.a.)
Fixed Interest Portfolio (Total
Return)
5.51
7.22
8.18
STEFI Composite Index
5.25
5.71
7.16
Structure of portfolio
Source: PortCIS
Liquidity
Funds are available on short notice (subject to normal market
settlement periods of approximately 3 days). Penalties may apply
on NCDs that are redeemed early. Bonds sold before maturity will
be at prevailing market values.
Commentary
The current global market suggests that, in general, interest rates
will remain at low levels, at least until 2015. SA interest rates are
expected to remain flat in this period but it is also wise to protect
against any official rate cuts by holding fixed-rate investments.
Conversely, if official rates rise sooner than expected this portfolio
has the flexibility to respond by selling bonds and up weighting
short term securities that benefit immediately from rising rates. The
portfolio is therefore actively managed to achieve yield advantage.
The information contained in this communication does not constitute an offer or solicitation to enter into any transaction, nor does it constitute any
recommendation, guidance or proposal to enter into any transaction. The information is provided for illustrative purposes only and is not guaranteed.
Past performance is no indication of future performance. A private client portfolio of direct investments and not a collective investment scheme.
Absa Portfolio Managers (Pty) Limited trading as Absa Asset Management Private Clients, Registration No: 1954/001116/07, Authorised Financial Services Provider (licence No. 552)