SIM Enhanced Yield gets AA- credit rating

Melville du Plessis, Portfolio Manager at SIM.

Global Credit Ratings (GCR) has confirmed the national credit fund rating it gave to the Sanlam Investment Management (SIM) Enhanced Yield Fund as AA-(ZA)(f), with an outlook of stable. In determining a fund rating, GCR completes a comprehensive assessment of the fund’s management as well as its historical performance.

GCR noted that “The SIM Enhanced Yield Fund has met its performance objectives over the past three years and also since inception, while the volatility over 1, 3 and 5 year time horizons is assessed as moderate. The growth in assets under management has been strong over the past three years, highlighting the appropriateness of the fund’s mandate and execution in meeting investor requirements.”

In particular, GCR qualitatively assesses the fund’s management and performs an evaluation of the portfolio’s historical performance in terms of return volatility, underlying asset quality, as well as market and liquidity risks. In determining the fund rating, GCR’s portfolio analysis considered credit risk, concentration risk, tenor, duration, NAV volatility and additional sources of market risk, in addition to the SIM Enhanced Yield Fund’s stress-tested weighted average credit rating.

Credit rating aside, a further tribute to SIM’s fixed interest team is the professional endorsement from Glacier by Sanlam, who recently added the SIM Enhanced Yield Fund to their well-known Shopping List. Says Leigh Köhler, Head of Glacier Research, “In selecting funds for our Shopping List we look for quality fund managers who produce consistent outperformance over meaningful time periods and the ability to protect capital in adverse market conditions, relative to peers.”

“The SIM Enhanced Yield Fund is managed by Melville du Plessis, who follows a team-based approach with respect to the instruments and issuers that make up the fund’s investment universe. During the course of our extensive due diligence process, we continue to find that the process in SIM’s fixed interest team is one of the outstanding competitive advantages for this fund and Sanlam Investments as a whole. We believe that du Plessis’s experience and ability in managing this fund is definitely a value-add. The fund has consistently delivered returns above its benchmark and the SA Interest Bearing Category average over one-, three-, five- and six-year periods. However, the fund does display higher volatility in comparison to the category average, but investors are compensated for the added risk”, Leigh Köhler was quoted as saying.

The SIM Enhanced Yield Fund’s portfolio manager, Melville du Plessis, noted that ‘These are notable achievements for us. The SIM Enhanced Yield Fund was separately scrutinised by both GCR and Glacier. After going through the rigorous due diligence processes of both GCR and Glacier, the SIM Enhanced Yield Fund came out on top and received a positive endorsement from both. The fund’s track record so far demonstrates that it is possible to outperform over changing interest rate cycles, as well favourable and even unfavourable credit market environments”.

Fund manager insights

Performance is driven by movements in interest rates and credit markets, and is typically aimed at investors who have at least a six- to twelve-month investment horizon. It aims to offer a higher yield than a typical money market fund by taking advantage of the higher yields offered by a wide range of debt instruments, including corporate bonds.

The fund is mandated to invest in unlisted financial instruments for efficient portfolio management. The investment manager will also invest in derivatives as allowed and appropriate from time to time in order to achieve its investment objective.

To see 2017-11-SIM EYF Report PDF click here.