Prescient Investment Management’s well-known interest bearing fund, the Prescient Cash Quantplus® Fund, has changed its name. It is now known as the Prescient Yield Quantplus® Fund. At the same time, the Fund has also swapped to a more transparent benchmark, the Short-term Fixed Interest Call Deposit Index (SteFI Call).
According to Farzana Bayat, fund manager of the Prescient Yield Quantplus Fund, the name change follows an advisory sent out by the Financial Services Board (FSB). The FSB noted that ‘cash’ can only be used in a fund name if the fund’s interest-bearing assets reached maturity under 21 days. The Prescient fund allows for instruments to mature up to a maximum of 18 months. Bayat says, “The name change will, however, not change the way the fund is run, or the processes we follow.”
The benchmark had previously been the Inter Bank Call Rate (IBCR). This also changes, with the fund adopting the SteFI Call as its new benchmark. Bayat says, “The IBCR was not ideal as it was internally calculated, and therefore not as transparent as the SteFI Call. The latter is also calculated independently, and we felt it would serve as a better benchmark.”
The Prescient Yield Quantplus Fund invests in fixed interest stocks like government, parastatal, and bank bonds and money market instruments. It aims to obtain a high level of income for short-term investors while preserving capital and maintaining high levels of liquidity. Since its inception, Prescient Investment Management has placed a great degree of emphasis on maximizing cash returns. Because all other asset classes are priced off cash, any outperformance in cash, leads to outperformance in other asset classes. This focus on outperforming cash, has led to cash management being a core competency at Prescient, which is reflected in the performance of the Yield Quantplus Fund.
Prescient’s approach in managing cash places a strong focus on minimising risk for clients. Bayat says, “Due to the nature of our fund, we are not dramatically affected by the current market volatility. With this fund, you can sleep at night and not worry, because regardless of what happens in the market, the fund is structured to not underperform the benchmark.” The Fund uses any additional returns that it generates above the benchmark to invest in specialized strategies designed to enhance yield further, which serves as a buffer during volatile market conditions.
Bayat also notes the current volatility could serve the Prescient Yield Quantplus Fund well. “Volatility creates opportunities in the market, and the fund would look to take advantage of these opportunities.” The fund has returned 7 percent in the past year to end August. The IBCR returned 4.7 percent over the same period. The fund has also returned 10.19 percent per year since inception in 1999. The IBCR, in comparison, advanced 8.5 percent.
The Prescient Yield Quantplus Fund’s portfolio holdings are selected on a quantitative basis. “The fund will deliver returns above the yield available from normal bank deposits. We aim to boost its performance by looking for value in the yield curve, identifying assets that perform consistently across all interest rate scenarios and by enhancing yield via credit instruments on good quality institutions. The fund is classified as a conservative fund as it is structured to minimise the risk of underperforming the benchmark. Risk is also mitigated by limiting instruments to F1+ rated instruments. “We follow a strict credit process and the fund aims to maintain an AAA rating at all times.
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