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STANLIB Sterling Cash Fund - News
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Stanlib Sterling comment - Sep 19
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Monday, 9 December 2019
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Fund Manager Comment
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The Sterling cash fund returned 0.00% in pounds for the third quarter of 2019 and 0.04% 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 2.7 million Sterling 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.
The political atmosphere in the UK remained volatile as the new Prime Minister Boris Johnson suspended parliament for more than a month before Brexit. Subsequently, 10-year Gilt yields fell below 0.5%, lower than its previous August 2016 trough, which came after the Bank of England (BoE) slashed interest rates to an all-time low following the Brexit vote. However, the decision to suspend Parliament was later overturned by the Supreme Court.
On the economic front, the manufacturing downturn in the UK continued in September, as the Purchasing Managers’ Index (PMI) indicated a contraction for the fifth month in a row. Levels of output, new orders and new export business fell further, while those for stocks of purchases rose as some companies started to rebuild their inventories ahead of the 31 October Brexit deadline.
On the policy front, the BoE kept interest rates on hold at 0.75% and signalled that prolonged Brexit uncertainty will keep interest rates lower for longer. The fund continues to focus on high quality issuers, with about 46% invested in entities rated Aa3 or higher.
The fund’s weighted average maturity was marginally decreased to 42 days from 44 days previously and is mainly invested in certificates of deposit and commercial paper with banks and corporates.
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Stanlib Sterling comment - Mar 16
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Tuesday, 14 June 2016
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Fund Manager Comment
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Fund review
The fund returned -0.03% in the quarter to end March 2016. The fund returned -0.2% in the year to end March.
Your fund, managed by Fidelity Worldwide Investment, is a one billion pound 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
Since hitting a peak against the dollar of $1.59 in June 2015, the pound declined sharply by almost 11% to $1.41 by 21st January 2016. This was its lowest level since 2009. The news that interest rates are unlikely to rise in the near future in the UK has contributed to this decline, but more so the uncertainty created by the upcoming referendum in June on whether to remain in the Euro union.
The pound and the euro tend to move broadly in a similar direction or trend relative to the dollar. However, the pound has declined from 69 pence to the euro in July to 81 pence by 7th April 2016, a fall of 16.4% in just nine months, although interestingly it is back to where it was last June versus the euro. One would think that most of the pound’s decline has already occurred.
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Stanlib Sterling comment - Jun 14
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Monday, 15 September 2014
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Fund Manager Comment
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Fund Review
The fund did +3.0% in dollars in the first six months of 2014, after a return of +2.45% in the second quarter. This nice positive return was entirely due to the strong pound, which gained 3.2% against the dollar during the first six months of 2014.
Your 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.
Looking Ahead
Most forecasters have been betting on a stronger dollar, because of the stronger US economy than most others and therefore the likelihood that the US would be the first to eventually raise interest rates.
The pound's up trend against the dollar remains firmly intact, even though it has pulled back a bit from a six year high in early July 2014.
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Stanlib Sterling comment - Mar 14
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Friday, 6 June 2014
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Fund Manager Comment
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Fund Review
With short-term money market interest rates continuing at rock-bottom levels, the fund's return is lower than the costs of the fund, something that has been the case for the past five years. However, the slightly stronger pound versus the dollar during the quarter to end March, being 0.64%, helped the fund's return when calculated in dollars.
The underlying Fidelity Institutional Sterling Fund has as its objective to offer capital preservation, daily liquidity and a stable net asset value, whilst producing a return to the investor in line with money market rates. The fund is rated AAA by Standard & Poors and by Moody's Rating Agency. The fund holds money market instruments with a weighted average maturity of 36 days and is paying a yield higher than its benchmark. However, money market yields are the lowest in decades and in most cases are insufficient to cover the costs of the fund.
Looking Ahead
The United Kingdom central bank is unlikely to raise interest rates in the short-term, although it is possible later in 2014. Meanwhile the pound has continued appreciating against the dollar during much of 2014, gaining 1.7% by early May and 10% over the past 12 months.
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Fund Name Changed
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Thursday, 22 July 2010
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Official Announcement
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The STANLIB Offshore Sterling Fund will change it's name to STANLIB Sterling Cash Fund, effective from 22 July 2010
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Stanlib Sterling comment - Jun 07
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Thursday, 27 September 2007
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Fund Manager Comment
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During the quarter, the fund marginally underperformed its benchmark on a net-of-fees basis.
An overweight position in UK gilts relative to investment-grade corporate bonds restricted returns, given that corporate bonds outperformed gilts over the review period.
Holding bonds less sensitive to interest rate increases than the benchmark proved rewarding to performance over the quarter. Bond yields in the UK rose over the period amid expectations of further interest rate rises.
An overweight exposure to selected Emerging Market bonds enhanced returns, as credit spreads tightened in April and May. Moreover, exposure to high-yield bonds and asset-backed securities added to relative performance.
Within the investment-grade portion, the fund profited from its exposure to BBB-rated issues at the expense of AAA and AA-rated issues. The lower-rated securities outperformed their higher-rated peers.
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Standard Bank Sterling comment - Dec 04
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Thursday, 17 March 2005
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Fund Manager Comment
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The Manager commenced the period with the portfolio's Weighted Average Maturity (WAM) positioned at 60 days. During the quarter, the Manager purchased additional securities in the one to three month part of the curve to take advantage of market interest rates that was pricing in no further rate changes by the BoE. At the end of December, the portfolio's WAMstood at 56 days.
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