Launched in April 2009 the Fund seeks to provide income and ready access to capital by investing in Sterling, Euro and Dollar corporate bonds of no more than six years’ maturity.

The fund

  • A pioneer in the short dated universe in the aftermath of the global financial crisis.

  • Seeks to balance interest rate, credit and liquidity risks judiciously.

  • Managed by a highly experienced team.

Meet the Sanlam Fixed Interest Team

Peter Doherty
Peter Doherty
Head of Fixed Income
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Guillaume Desqueyroux
Guillaume Desqueyroux
Fund Manager
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Darren Reece
Darren Reece
Fund Manager
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Thomas Wells
Thomas Wells
Fund Manager
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Chris Turdean
Chris Turdean
Investment Analyst
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Why invest in the fund?

  • Short duration approach means low sensitivity to wider bond market volatility or fears of inflation 
  • Team has extensive experience across the credit market with complementary skills throughout the team. French flair and a battle-hardened Brit!
  • Sentiment towards Financials remain poor after the Global Financial Crisis. Our extensive knowledge and research identifies significant opportunities in what is more of a ‘utility like’ sector
  • Sanlam’s position as a recognised expert in credit means that we have good access to the primary (new issues) market – where demand exceeds supply
  • Transparency and scalability of our process – no leverage, CoCos (Contingent Convertible Securities), derivatives, structured products or equities.

Our Short Dated Corporate Fund is a global short duration corporate bond offering, with the underlying exposures across a range of developed markets.

Our investment approach offers a number of strengths – most critically short duration strategies can offer capital preservation and downside protection when interest rates or ‘risk free’ rates are rising. The fund is the fruit of our focus on corporate sector earnings visibility.

The fund is highly diversified, with a healthy spread of investments across different countries, sectors and securities, and it is multi-currency and fully FX hedged.

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 have excellent access to the primary (new issues) market – where demand exceeds supply

Darren Reece, Fund Manager

Fund Commentary

August 2021

Market/macro backdrop
The low volatility theme in fixed income markets continued throughout August, with spreads trading in narrow ranges despite the headlines during the month: rising Covid cases and hospitalizations, the withdrawal from Afghanistan, the Fed’s potential taper of purchases, China’s battle with the tech sector and a hurricane season that has begun with devastating storms.
 
Performance vs sector/benchmark
The Fund produced a performance of -3bps in August (source: Morningstar – B Share class).
The Fund is not managed against a specific benchmark or sector.

Positive and negative contributors 
One of our most satisfying trades this month was in global real estate player Kennedy Wilson. It has always been quite cheaply valued. We’ve got to know it well and have regular dialogue with the Investor Relations team in the US. The company has two different entities, Kennedy Wilson Europe (KWE) and Kennedy Wilson Group. The Investment Team identified an opportunity which would lead to an early redemption of KWE securities which materialised during the month and added a healthy contribution to performance. The securities were sold during the month at a negative yield, something that is still quite rare in the sterling credit world.
There were no individual detractors of note in August.

Significant portfolio changes - buy/sells 
The Team invested in a new issuer for the Fund, Fluor – this is an infrastructure and energy solutions company that should benefit from President Biden’s huge spending on infrastructure. It has also been buying back debt which provides another catalyst for the credit.

Fund/corporate/team highlights
We are pleased to announce that the Sanlam Credit Fund and Sanlam Hybrid Capital Bond Fund celebrated their five-year anniversaries at the end of August. Please click here for further detail on the Credit Fund or here for information on the Hybrid Capital Bond Fund. 

Outlook
As the summer season comes to its end the investment team expects an active primary market in September which is typically the busiest month of the year, particularly following Labor Day in the US.
 
Should the Fed’s and indeed ECB’s tapering plans begin to pressure long-dated interest rate markets, we suspect credit spreads could underperform a little. However, we don’t believe any weakness will last too long. After all, credit fundamentals remain solid, default rates are falling, and the ability of companies to service their debt is strengthening. We therefore continue to emphasise the importance of the Fund’s short duration strategy.

Coming soon
Explore the details
A portfolio of primarily investment-grade short dated corporate bonds.

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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 invests in short-dated bonds. Investment in bonds and other debt instruments is subject to interest rate risk and credit ratings. 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.  If long-term interest rates rise, the value of your shares is likely to fall. Exchange rate changes may cause the value of investments to go down as well as up.

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