Top-performing Cadiz Absolute Yield Fund now exceeds R1 billion
Strong net inflows, as a result of the Cadiz Absolute Yield Fund consistently meeting investor expectations, have pushed the fund’s assets under management above R1 billion for the first time, making it the third Cadiz unit trust fund after the Cadiz Money Market and Equity Ladder Funds to achieve this milestone.
The Cadiz Absolute Yield Fund, which received a 2010 Morningstar Financial Mail Fund Award in the Cautious Balanced category as a result of its superior risk adjusted performance, is a flexible fixed interest fund. It aims to provide investors with a return of inflation plus 3% (CPI+3%) over rolling three year periods and a positive return over any rolling twelve month period. The fund once again achieved this objective for the three year period to 31 August 2010 with an annualised return of 11.38% per annum (source: Morningstar), whereas CPI+3% was equal to 10.27% per annum. This placed the Cadiz Absolute Yield Fund a very credible 10th of 512 unit trust funds over this period. Furthermore, the fund has delivered more consistent returns than a traditional income fund and reduced the volatility normally inherent in the bond market.
Paul Hutchinson, Head of Cadiz Collective Investments said; ‘In the difficult investment environment of the past couple of years, the Cadiz Absolute Yield Fund has appealed to retail and multi-manager investors who do not want to make the complex asset allocation decision between the growing (in number and complexity) range of fixed interest instruments. It is, however, the fund manager’s ability to make use of the myriad of available investment opportunities to diversify risk and enhance the yield of the portfolio that has proven to extremely attractive and beneficial to investors’.
Commenting on the fund’s current positioning, Bronwyn Blood, the fund manager said; ‘We continue to generate most of the Cadiz Absolute Yield Fund’s outperformance by targeting assets that are likely to beat CPI+3% over the medium term. This requires a thorough bond, money market, property and credit valuation process to identify quality, yield enhancing assets. We limit interest rate volatility in the fund and manage this by using derivatives and by keeping duration in the fund low. These simple factors should enable us to deliver steady consistent, outperformance above the benchmark while keeping risk to a minimum.
