Asset management firm Stanlib will on Wednesday launch a new fund targeting corporate treasuries sitting on piles of cash and in search of higher yield.
The Stanlib Corporate Enhanced Yield Fund will be headed by Eulali Gouws and Ansie van Rensburg, part of the asset manager’s fixed-income investment team, led by Victor Mphaphuli.
The company, which has R600bn in assets under management, told Business Day that the fund is suited to corporates seeking returns in excess of money market funds, while maintaining a conservative investment mandate and high liquidity.
Charlene Klöhn, Stanlib’s head of corporate cash solutions, said the fund that is particularly appropriate for a company’s core and strategic cash balances, will follow a conservative strategy, with exposure to longer-dated fixed-income instruments restricted to bank and government exposure only.
“Money market funds have long been favoured by SA corporates for optimising returns on operational and short-term cash positions,” said Klöhn.
“However, with corporates tending to maintain cash balances for longer periods, there is benefit in investing in enhanced yield funds, without compromising liquidity. The Stanlib Corporate Enhanced Yield Fund was launched to target longer-term cash seeking out returns exceeding money market rates, while offering next-day liquidity.”
Stanlib’s fixed-income team has R273bn in assets under custody, nearly half of the company’s assets under management.
“As specialist fixed income managers, the Stanlib team manages funds across the fixed-income universe. This breadth of scope, combined with an experienced team of portfolio managers, researchers and credit experts, provide deep insight into the market environment, helping to identify opportunities that could easily be missed if you focused on one area,” Klöhn said.
The fund will “give corporates access to these opportunities and enable them to achieve higher yields on the cash under their management”, she said.
More headwinds
SA’s largest asset managers, faced with many headwinds, have been bringing new products to the market in search of returns for clients.
Stanlib CEO Derrick Msibi told Business Day earlier this year that the flight of wealthy individuals was one of the reasons the industry will in the next two to three years face more headwinds than tailwinds.
Msibi painted a bleak picture for the industry over the next few years, saying the sector’s performance depends on how much savings there are for them to manage, and this is influenced by how fast the economy grows, how many people have jobs, returns from capital markets and whether money is being saved or taken out of SA.
Stanlib’s rivals Coronation will this week also launch two new income funds, the Active Income Plus Fund and the SA Income Plus.
Coronation said the key objective of Coronation Active Income Plus Fund is to achieve a return that is about a 100 basis points higher than the traditional income fund portfolio by taking a “little bit more risk”.
It will do so by using opportunities in the offshore foreign currency-denominated credit markets to a larger extent than one would in a more conservative portfolio.
Coronation, which has R602bn in assets under management, is targeting multi-asset managers, discretionary fund managers and advisers that are building portfolios for clients with drawdown objectives for the fund.
Coronation will simultaneously launch another fund, the Coronation SA Income Plus. The Cape Town-based fund manager said the launch of this fund is in response to regulation 28, which came into effect last year.
The government designed regulation 28 to protect investors against poorly diversified investment portfolios by ensuring that preretirees invest their money sensibly, without too much exposure to risky assets.
Ninety One, SA’s largest asset manager, in August launched the Global Diversified Income Fund aimed at investors looking for attractive US dollar cash-plus returns for limited additional risk.
The fund invests primarily in a range of global fixed income instruments, including government and corporate bonds, and currencies from developed and emerging markets.
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