Allan Gray Changes to Income Fund Offering
Allan Gray has recently introduced two new funds, The Allan Gray Interest Fund and the Allan Gray Income Fund. The funds will be available from 20 August 2024 and aims to provide investors with a higher return than money market funds by investing in instruments with a longer duration.
The Allan Gray Interest Fund
The Interest Fund seeks to generate returns higher than bank deposits and traditional money market funds, while maintaining capital stability and low volatility, by investing in select South African interest-bearing securities. These primarily consist of floating-rate notes, money market instruments and fixed interest paper with a low duration. Returns are likely to be less volatile than those of traditional income and bond funds, but more volatile than those of money market funds.
For clients with an investment horizon of up to one year, we believe the Interest Fund is a better alternative to traditional money market funds, since it is not subject to the same duration restrictions imposed on money market portfolios, which can constrain the return potential of these funds.
Allan Gray Income Fund
The Income Fund seeks to generate income and produce returns that are superior to traditional money market funds, while preserving capital and minimising the risk of loss over any one- to -two-year period. The Income Fund invests in a broad range of South African interest-bearing securities, such as floating-rate notes, inflation-linked bonds, fixed-rate instruments and money market securities, with limited exposure to offshore interestbearing securities. While the Income Fund can have limited exposure to equities and property, we expect this to occur infrequently and to typically coincide with unusual or extreme points in the valuation cycle. Returns are likely to be less volatile than those of bond-only funds.