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

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Meet the Sanlam Fixed Income 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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Josef Svoboda
Josef Svoboda
Fund Manager
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George Dobson
George Dobson
Junior Fund Manager
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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
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.

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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 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. 

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