29 Jan 2020
A 39% cumulative return over three years drives consecutive award for Sasfin
29 January, Cape Town: The Sasfin BCI Flexible Income Fund won again last night at the prestigious Raging Bull Awards. The Fund, managed by Philip Bradford, won the award for Best South African Multi-Asset Income Fund over 3 years ending December 2019, by generating a cumulative return of 39% for the period, beating inflation by 25% and the JSE All Share Index by 15%. The awards remain coveted, with competition increasing dramatically over the years. In 1997, there were less than 50 unit trust funds when the Raging Bulls were first presented; now there are more than 1000, and a repeat of the win from last year's event ensures Bradford and Sasfin signal themselves as managers that investors can choose with confidence. In terms of the Fund’s asset allocation tactics, over the past 12 months, Bradford’s team bought longer-dated AAA bonds, increasing the duration of the fund, and subsequently reduced the duration when markets returned to normal. He argues that at times of maximum pessimism, as had occurred in the build-up to the ANC elective conference in 2017, bonds offering yields of 6% to 7% above inflation were bought for the Fund to lock in these returns for their investors. Despite only investing in conservative assets like bonds and cash, the Sasfin BCI Flexible Income Fund has returned an annualised 10.5% per annum since its inception in July 2015, which is significantly ahead of its benchmark and more than double the return of the JSE All Share Index.
Bradford explains, “The Fund is actively managed and is suitable for conservative investors seeking high-income returns and capital preservation by flexibly investing across a range of bonds and other lower-risk income assets. We aim to provide similar or better returns than that of the All Bond Index with lower volatility. It is designed to be used as the income-producing portion of an investor’s asset allocation. In this low return environment, it is imperative that all efforts be made in trying to maximise return but with a risk-cognisant mindset. “The fund is currently conservatively positioned in anticipation of a potential downgrade for SA and other global risks. We have our lowest exposure to fixed rate bonds since inception,” he adds.
Challenges and opportunities ahead
Looking ahead at South Africa’s economic and fiscal challenges, Bradford’s team is likely to remain cautious going into the Budget Speech in February and the potential downgrade by Moody’s in March. Bradford is also concerned about the risk of a global slowdown which will be negative for emerging markets. He says, a low growth environment is one that is typically better to hold bonds because interest rates are likely to be cut further.
Held at the Cape Town International Convention Centre, the awards’ keynote speaker, Dr Leila Fourie, Group CEO of the Johannesburg Stock Exchange (JSE), unpacked the environment of uncertainty, and called for greater responsibility in “changing the narrative” to improve sentiment in the country, as we move towards the Budget Speech in a matter of weeks. Benefiting from a rising societal consciousness, she proposed a greater commitment to sustainability and social impact with the JSE’s partners.
“In order for our narrative to take hold we need to act together. My commitment from the JSE is that we will partner with you to create this. In conclusion, I would like to congratulate all of you particularly when you are subject to the vaguery of this year’s markets and geopolitics.”
About Sasfin Holdings
Sasfin is a bank-controlling company listed in the “Financials: Investment Services” sector of the JSE Limited (“the JSE”). Sasfin and its subsidiaries including Sasfin Asset Managers provide a comprehensive range of specialist financial products for Business and Wealth clients.