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STANLIB Euro Cash Fund - News
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Stanlib Euro Cash comment - Sep 19
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Monday, 9 December 2019
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Fund Manager Comment
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Fund Commentary: 3rd Quarter
The Euro currency fund returned -0.27% for the third quarter of 2019 and -0.80% for the year to date. The fund aims to maintain capital value and liquidity while producing a return for investors in line with money market rates.
The 3.2 million Euro fund, managed by Fidelity International, invests in a diversified range of high quality short-term instruments including certificates of deposit, promissory notes, commercial paper, floating rate notes, discount notes, corporate bonds and mortgage backed securities. Investments will have a credit quality consistent with maintaining Moody's Aaa rating and a rating of AAA by Standard & Poor’s for the fund. European core yields fell as investors flocked towards safe-haven assets amid the weak economic backdrop, coupled with intensifying US-China trade tensions, Italian political crisis and fears of a no-deal Brexit. Business growth in the eurozone stalled over the period, weighed down by shrinking activity in Germany, where the manufacturing recession deepened.
IHS Markit’s composite Flash Purchasing Managers’ Index (PMI) for the eurozone fell to a six-year low of 50.4 in September. The decline was led by the manufacturing PMI, which fell to an 83-month low of 45.6 in the third quarter of 2019, down from 47.6 in June 2019. The flash eurozone services PMI also slid to an eight-month low of 52.
Consequently, the European Central Bank (ECB) lowered its GDP forecasts for the eurozone for this year and the next. It now expects growth of 1.1% in 2019 and 1.2% in 2020. In peripheral Europe, Italy’s GDP is now expected to come in at 0.6% in 2020, after projections of a mere 0.1% growth in 2019. The new forecast was down significantly from April, when the previous government targeted GDP growth of 0.2% in 2019 and 0.8% in 2020.
On the monetary policy front, the ECB announced that it would revive its quantitative easing programme from November. Moreover, the bank cut deposit rates by 0.1 percentage points. The bank said its asset purchase programme would "run for as long as necessary" and interest rates would remain low until inflation reached its target rate of 2%, after it declined to 1% in September from 1.2% in June.
The fund continues to focus on high quality issuers, with about 52% invested in entities rated Aa3 or higher. The fund’s weighted average maturity was increased to 44 days from 34 days previously and continues to mainly invest in commercial paper and certificates of deposit with investment companies and banks.
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STANLIB Euro Cash comment - Mar 19
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Wednesday, 12 June 2019
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Fund Manager Comment
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The Euro currency fund returned -0.26% for the first quarter of 2019 and a one year return of -1.06%. The fund aims to maintain capital value and liquidity while producing a return for investors in line with money market rates.
The 3.2 million Euro fund, managed by Fidelity International, invests in a diversified range of high quality short-term instruments including certificates of deposit, promissory notes, commercial paper, floating rate notes, discount notes, corporate bonds and mortgage backed securities. Investments will have a credit quality consistent with maintaining Moody's Aaa rating and a rating of AAA by Standard & Poor’s for the fund.
Macroeconomic indicators in the eurozone continued to lose momentum, with the IHS Markit's Eurozone Composite Final Purchasing Managers’ Index (PMI) dipping to 51.6 in March from February's 51.9. This was higher than an earlier flash reading of 51.3. The services PMI rose to 53.3 from 52.8, ahead of the flash estimate of 52.7. Growth in the eurozone slowed further this quarter, with GDP falling from the peak of 2.7% in the fourth quarter of 2017 to 1.1% in the fourth quarter of 2018. Much of this weakness stems from Germany, the traditional growth engine of the eurozone, though other key economies such as France and Italy did not fare much better. Germany's leading economic institutes have
lowered their 2019 growth forecast for Europe's biggest economy to 0.8% from a previous estimate of 1.9%. In particular, the German manufacturing sector has been at the epicentre of the slowdown, as a more challenging global growth backdrop, combined with the threat of US tariffs weighed on manufacturing activity and sentiment.
On the monetary policy front, the European Central Bank (ECB) indicated that it will hold interest rates steady at least through to the end of 2019. It also signalled that its targeted long-term refinancing operation (TLTRO) will be extended, which provided some support to the market.
The fund continues to focus on high quality issuers, with about 41% invested in entities rated Aa3 or higher. The fund’s weighted average maturity was increased to 44 days from 34 days previously and continues to mainly invest in commercial paper and certificates of deposit with investment companies and banks.
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STANLIB Euro Cash comment - Mar 16
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Friday, 17 June 2016
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Fund Manager Comment
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Fund Review
The fund returned -0.2% in euros in the quarter to end March 2016. The return was -0.7% in the year to end March. Ever since the Recession, interest rates have been so low that the fund’s investments are unable to produce a return that exceeds the cost of managing/administering the fund, despite this cost having been reduced.
This fund, a 1.4bn euro fund, is managed by Fidelity Worldwide Investment and is a triple A rated stable net asset value liquidity fund, with a focus on security and diversification of risk, whilst delivering a return in line with money market rates. The rating is the highest possible money market rating of Moodys and Standard & Poors.
Looking Ahead
The dollar finally started to depreciate a bit against the euro and most other currencies during the first quarter of 2016, after thumping all these currencies for some time. A strong dollar is bad for the US economy, hurting exports and has also caused imported inflation in many of the emerging market economies.
Against the all-important second biggest currency, the euro, the dollar lost about -4.8% in the quarter to end March and -5.1% in the year to end March. However, it remains in the trading band it has been stuck in for the past 15 months, namely $1.06 to $1.15 (currently $1.126). Should it break out on either side, then we could get a run. Hopefully for the world it will be on the weaker side.
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STANLIB Euro Cash comment - Jun 14
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Thursday, 11 September 2014
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Fund Manager Comment
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Fund review
The fund did -0.98% in dollars in the first six months of 2014, after a return of -0.8% in the second quarter. The euro has declined by 0.8% against the dollar during the first six months of 2014, causing most of the loss.
This fund, managed by Fidelity Worldwide Investment, is a triple A rated stable net asset value liquidity fund, with a focus on security and diversification of risk, whilst delivering a return in line with money market rates. The rating is the highest possible money market rating of Moodys and Standard & Poors. The fund does not use derivatives and has not experienced any negative returns to date, including during the mighty 2008/9 stock market crash and great recession.
The European central bank lowered its official interest rate to a record low 0.15% during the quarter, so the instruments held by the fund are paying very little interest at this stage, with no change expected for a while. Inflation remains extremely low at 0.5% in the Eurozone.
Looking Ahead
The European central bank is determined to see the euro depreciate against the dollar because this would help raise the inflation rate and move away from the more dangerous deflation. Certainly the euro has been falling against the powerful pound, having lost over 5% in 2014 to a two year low.
So it is probably wise not to counter the wishes of Mario Draghi, the Chairman of the European Central Bank, who wishes to see the euro depreciate.
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Fund Name Changed
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Thursday, 6 October 2011
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Official Announcement
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The STANLIB Offshore Euro Cash Fund will change it's name to STANLIB Euro Cash Fund, effective from 29 September 2011
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Merger
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Thursday, 6 October 2011
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Official Announcement
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The Stanlib Offshore Swiss Franc Fund merged into the Stanlib Euro Cash Fund effective 29/09/2011.
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Standard Bank Euro comment - Dec 04
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Thursday, 17 March 2005
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Fund Manager Comment
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The fund commenced the period with the portfolio's Weighted Average Maturity (WAM) positioned at 45 days. During the quarter, WAM was lengthened to 60 days through the purchase of 4 and 6 month paper, to take advantage of the yield curve that was pricing in interest rate rises by the ECB. At the end of December, the portfolios WAMstood at 45 days.
Given that the ECB is likely to leave interest rates unchanged at 2% during the first half of 2005, the Manager will look to increase the WAM of the fund to take advantage of a positively shaped yield curve (reflecting market expectation for moderate rate increases in the first half of 2005.
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