STANDARD BANK GILT FUND
This fund is in the bond sector. It has 1 128 unitholders and assets of R155-million. Launched in February 1995, it is managed by Ansie van Rensburg for Standard Bank Fund Managers
OBJECTIVE: To generate a return providing medium-term capital appreciation in excess of the JSE all-bond index and a reasonable level of income.
TARGET MARKET: Investors who desire the possibility of capital growth, and income derived from the performance of selected gilt and semi-gilt investments.
CHARGES (incl VAT): Initial: 1.09%. Annual service fee: 0.86%.
MINIMUM INVESTMENT: Lump sum: R2 000; monthly: R100.
PAST PERFORMANCE (per Micropal):
JSE all-bond index: 22.2% (figure provided by Standard Bank)
Sector average: 58.8%
Performance is calculated on a buy-to-sell basis with income reinvested.
PAST TWO INCOME DISTRIBUTIONS: June 1997: 7.61. December 1997: 7.86.
MATURITY SPREAD: The pie chart depicts the fund's maturity spread. Unlike equity unit trust funds, bond funds have a maturity date. The longer the period of investment, the greater the volatility, so the risk profile of the fund can, to an extent, be assessed from its maturity spread. The higher the cash content, the lower the risk (this can also indicate an underperforming fund), and the higher the exposure to long bonds, the more risky the fund.
TOLL-FREE: 0860 123 003
ABOUT THE FUND MANAGER
EXPERIENCE: Worked for Volkskas Merchant Bank as money market trader for six years. Then joined CM Interbank, a money broking operation, as director. Joined Standard Corporate and Merchant Bank in 1991, and has managed this fund since inception.
INVESTMENT ATTITUDE: Bond rates experienced a 200 basis point correction over the past month. The entry level in the bond market is now much cheaper. With continuing downward pressure on short-term interest rates we see this as an opportunity to buy and to lengthen duration.
VIEW ON PAST PERFORMANCE: The past performance of the fund has been satisfactory - it came third in its sector for the year ending March 1998. Over the past six months fund performance has been affected by the change in the shape of the yield curve as well as the unforeseen weakening in the rand. With the currency weakness and unexpected foreign outflows, as well as the decline in reserves, the bond market corrected and affected the fund's performance negatively.
THE FUTURE: The recent weakness in the bond market will last as long as the market turmoil persists. The rand weakness has eroded the balance of payments position, which places upward pressure on interest rates to protect the rand. This will affect growth and inflation, which will be positive for the bond market. We have structured the fund to benefit from the above scenario.
This fund has produced stable returns, while keeping the portfolio duration in line with the JSE all-bond index. The fact that the fund is heavily weighted towards long bonds makes it an option for investors wanting to benefit from a fall in long-term yields, as this normally results in an increase in capital value of the long bonds. The fund can be considered to be medium-risk.
Lucienne Fild 6/98