Stanlib’s fixed income investment team has breached R300bn in assets under management, with nearly 30% of the assets comprising government bonds and the group assigning a buy sign to SA government bonds.
Head of fixed income at Stanlib Victor Mphaphuli said the team was now managing assets valued at R302bn — up nearly R100bn over the past five years — with the group managing the largest fixed income portfolio outside the Public Investment Corporation (PIC).
“Our growth in assets under management while maintaining strong performance across all strategies is testament to the team’s commitment and vision set in 2019.
“Our aim is to build on this momentum and continue delivering exceptional outcomes for our clients. At the core of our success is a stable team that has been together for a long time and is steeped in diversity, which encourages a debating culture.
“This is crucial in that it protects the credible investment philosophy and process that is at the centre of our success,” Mphaphuli said.
“There has been big interest in fixed income assets across the board because of the cycle we have had. … we put measures in place to get a higher market share than our competitors.
“Part of the reasons behind our success is that we have a strong and dominant fixed income team, which has been delivering in the top quintiles of our strategies,” he said.
“The team has a long track record of outperformance versus benchmarks and peers.
“This track record leads to clients buying into the ability of the team. This doesn’t just happen. This is the end product of a stable team who understand the culture and objectives of Stanlib, which is steeped in getting higher outcomes from our clients.
“The diversity of the team is also a big factor behind the performance.”
The PIC, Africa’s largest fund manager, has over the years increased its exposure to government bonds — with its exposure to Eskom’s bonds at more than R80bn.
The PIC has developed a framework to support key state-owned entities.
Government bonds
Mphaphuli said Stanlib’s exposure to government bonds accounted for 28% of the group’s fixed income assets.
Stanlib in its first quarter tactical asset allocation said SA government bonds were a buy.
“Domestically, stability in the GNU has been positive and so far markets have provided the benefit of the doubt. But policy action, outside a few areas such as the department of home affairs, has been slow to materialise, which will affect global investor sentiment towards SA,” reads the document.
“There are tentatively positive signs, such as UK-based Frasers Group’s interest in Holdsport. We hope that in the February budget there will be announcements of more business-friendly policies to continue to improve confidence,” it said.
“In the fixed income space, the carry available from SA government bonds can’t be ignored, but the yield has moved substantially since the election. We wouldn’t be playing for yield compression from here. Globally, credit spreads in the investment grade and high yield space look extremely tight and arguably are not compensating investors for the risk they are taking.”
Stanlib, which belongs to the Standard Bank group, has decided to integrate the unlisted debt expertise into its fixed income operations.
Mphaphuli said the integration of unlisted debt capabilities would allow the company to deliver a comprehensive offering that encompasses public and private credit markets.
“We believe these enhancements will significantly benefit our clients’ investment strategies,” Mphaphuli said. “By combining our expertise in unlisted debt with our existing fixed income capabilities, we are well-positioned to deliver greater value and innovation to meet all client needs across diverse market environments.”
Eulali Gouws will take over as the new money market head from next month.
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