The Funds aims to generate 5% income per annum, net of all fees from a Hybrid capital portfolio with medium volatility.

The fund:

  • Adopts a bottom-up approach investing in high quality issuers, lower down in the capital structure in order to achieve higher returns and enhanced yield
  • Embraces a contrarian but conservative approach to investing

  • Uses no derivatives, equities, leverage or structured products

Awards and ratings

 icon

Meet the Sanlam Fixed Interest Team

Peter Doherty
Peter Doherty
Head of Fixed Income
View profile
Guillaume Desqueyroux
Guillaume Desqueyroux
Fund Manager
View profile
Darren Reece
Darren Reece
Fund Manager
View profile
Thomas Wells
Thomas Wells
Fund Manager
View profile
Chris Turdean
Chris Turdean
Investment Analyst
View profile

Why invest in the fund?

  • Hybrid Capital is a differentiated asset class that sits between senior debt and equity – as such, it can offer returns with lower correlation to equities and fixed interest
  • Hybrid Capital could make much better use of your risk budget than high yield or long duration
  • We are investing in the subordinated debt of household names where the parent is investment grade, i.e. high quality companies
  • Sanlam’s position as a recognised expert in hybrid capital means that we have good access to the primary (new issues) market
  • Transparency and scalability - No leverage, derivatives, structured products or equities

We seek to deliver an attractive level of yield across the portfolio with a medium level of volatility.

We believe that investors need to re-frame how they think about fixed income. There are several reasons for this:

  • Government debt markets offer unfavourable risk/reward trade-offs as they are long duration (i.e. very sensitive to changes in interest rates) but years of Quantitative Easing mean that yields are extremely low – this means investor have little or no protection when risk-free rates begin to normalise
  • In a similar vein to government debt, high yield debt embeds significant risk (specifically default risk), but yields (particularly allowing for defaults) are extremely low by historical standards. We believe it would be more appropriate for investors to think of ‘high’ yield as medium yield. Hybrid capital offers a highly credible alternative to high yield.

Proven approach

Our approach is proven in the hybrid capital space – hybrid capital is a niche part of the capital markets and has its own ecosystem – Sanlam is part of that, with privileged access to the new issues market.

The lead Portfolio Manager is a recognised subject matter expert in hybrid capital, with over 30 years’ experience in the space.

Our track record speaks for itself – view our latest factsheet

Environmental, Social and Governance

Whilst the fund is not marketed as an “ESG” or “sustainable” bond fund, it is managed with ESG considerations as we believe this enables us to maintain our performance whilst improving the average integrity of our portfolio companies.

As part of our ESG strategy we:

  1. Watch list certain industries which screen negatively but where we have flexibility to allocate on a comparative basis
  2. Allocate capital to firms that are doing the right things by ensuring their business are sustainable
  3. Engage regularly with firms in our universe, which enables a deeper and more valuable understanding of our investment environment
  4. Operate on a transparent basis, recognising the impact that our choices can have on society, the environment and communities.

We can invest across the capital structure thereby picking the best risk/reward from Tier 1,2,3 and Preferred stock.

Peter Doherty, Fund Manager

Fund Commentary

August 2021

 

Coming soon
Explore the details
Aiming to generate 5% income per annum (net of all fees). The fund will invest in the subordinated debt of large, household names.

Related articles

Sanlam Credit Fund Five-Year Anniversary post image

Sanlam Credit Fund Five-Year Anniversary

We are delighted to celebrate the fifth-year anniversary of the Sanlam Credit Fund, launched on the 31st August 2016, managed by Peter Doherty, Guillaume Desqueyroux and Darren Reece.
Sanlam Hybrid Capital Bond Fund Five-Year Anniversary  post image

Sanlam Hybrid Capital Bond Fund Five-Year Anniversary

Since launch five years ago, the Sanlam Hybrid Capital Bond Fund has delivered a total return of 42.1%, placing it at the top of the Investment Association’s (IA) Strategic Bond sector over the period.
State intervention: creating a sweet spot for income investors  post image

State intervention: creating a sweet spot for income investors

The rise of state intervention and greater regulation was born out of the capitalism of the late 20th century, forged in the fire of the GFC and the sovereign debt crisis, and accelerated by the Covid-19 pandemic. Increased regulation has not always been welcomed, but in many cases has resulted in stronger companies and greater security for investors and is good news for subordinated debt.
Raising the bar: when greater regulation creates investment opportunity  post image

Raising the bar: when greater regulation creates investment opportunity

The rise of state intervention and greater regulation was born out of the capitalism of the late 20th century, forged in the fire of the GFC and the sovereign debt crisis, and accelerated by the Covid-19 pandemic. Increased regulation has not always been welcomed, but in many cases has resulted in stronger companies and greater security for investors and is good news for subordinated debt.
Sanlam Hybrid Capital Bond Fund - An Introduction post image

Sanlam Hybrid Capital Bond Fund - An Introduction

With quantitative easing and negtaive real rates the Fixed Income market has been a challenging one recently. In this short presentation Peter Doherty, Head of Fixed Income, explains the benefits of Hybrid Capital and how the Sanlam Hybrid Capital Fund could be a great Fixed Income addition to portfolios. 
Mitigating inflation post image

Mitigating inflation

Register to join our upcoming virtual Adviser Insights event.
Earnings potential is promising; but will inflation hinder recovery? post image

Earnings potential is promising; but will inflation hinder recovery?

The economic upturn is coming along nicely; an increasing number of people have been vaccinated against Covid-19 and investors seem confident that recovery will take hold. But will an abundance of positive sentiment backfire in the form of inflation?
Why allocate to hybrid capital instead of traditional high yield? post image

Why allocate to hybrid capital instead of traditional high yield?

In this Q&A Sanlam’s Head of Fixed Income Peter Doherty gives an overview of the hybrid capital market and why he believes it offers significant advantages over the traditional high yield market
Why Hybrid Capital over High Yield? post image

Why Hybrid Capital over High Yield?

In this video Peter Doherty, Head of Fixed Income, gives an update on the fixed income market and makes a case for why Hybrid Capital should be considered against traditional High Yield investments.
The role for onshore bonds in "all asset" financial planning post image

The role for onshore bonds in "all asset" financial planning

Register to join our upcoming virtual Adviser Insights event.
Bond yields rise as economy poised to reopen post image

Bond yields rise as economy poised to reopen

Welcome to our weekly newsletter, where we summarise the key market developments over the last seven days.
Onshore bonds: a product of the past or tax wrapper of the future? post image

Onshore bonds: a product of the past or tax wrapper of the future?

Onshore bonds were once the tax wrapper of choice, but in recent years international investment bonds and collective investments have been favoured by many advisers. With capital gains tax changes in the offing, could they be about to have their day in the sun once again?
2021: A new cycle of economic growth and renaissance  post image

2021: A new cycle of economic growth and renaissance

A new year dawns with a heightened need for a fresh start. With 2020 now firmly behind us, we can approach this year with renewed hope and a desire to seek new and exciting opportunities. Caution will need to be exercised, but there is much to feel positive about.
How our investment approach fared in 2020 post image

How our investment approach fared in 2020

The word ‘unprecedented’ was deemed the most overused word of 2020, but there are few better ways to describe the past year. As light starts to flicker at the end of the tunnel, we reflect on an extraordinary period and the lessons we’ve learned along the way.
Sanlam investment update - the global hunt for yield post image

Sanlam investment update - the global hunt for yield

Sanlam CIO Phil Smeaton assesses market conditions, the investment outlook and the resulting impact on our clients' portfolios in this month's investment update.
Hybrid capital: Secure income for uncertain times post image

Hybrid capital: Secure income for uncertain times

At a time when developed market government bond yields are close to zero, or negative in some cases, and companies are cutting or cancelling their dividends, there is much to be said for asset classes which offer a healthy and stable yield.
Sanlam investment update - time to sell sovereigns post image

Sanlam investment update - time to sell sovereigns

Sanlam CIO Phil Smeaton assesses market conditions, the investment outlook and the resulting impact on our clients' portfolios in this month's investment update.

Fund Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years’ performance is available in the fund factsheets.

The fund will invest in debt securities. The government or company issuer of a bond might not be able to repay either the interest or the original loan amount and therefore default on the debt. This would affect the credit rating of the bond and, in turn, the value of the fund. Investment in bonds and other debt instruments (including related derivatives) is subject to interest rate risk. If long-term interest rates rise, the value of your shares is likely to fall. The yield is gross and could be higher than what you will receive in the future. The Fund may engage in transactions in financial derivative instruments for hedging purposes. There is a risk that losses could be made on derivative positions or that the counterparties could fail to complete on transactions. The Fund may invest in Contingent Convertible Securities (CoCos). The value of CoCos is unpredictable and will be influenced by many factors including, without limitation (i) the creditworthiness of the issuer and/or fluctuations in such issuer’s applicable capital ratios; (ii) supply and demand for the CoCos; (iii) general market conditions and available liquidity and (iv) economic, financial and political events that affect the issuer, its particular market or the financial markets in general. The investor may not receive a return of principal if expected on a call date or indeed at any date. 

Ready to invest?
Contact us
Please agree to proceed. By doing so you agree that you have read and understood the foregoing disclaimer and confirm that you are a professional investor.

Please navigate to a service or product page and add the document to your brochure to continue.

Back
Name your brochure
Your details
Thank you!

Your brochure is on its way.

Brochure Confirmation - your brochure is on its way.

We hope you find this useful.

The value of investments and any income from them can fall and you may get back less than you invested.