The Metropolitan Gilt Fund recently scooped an award this year at the Micropal Fund Awards for the top performing fund in the bond sector over a three-year period.
While the bond sector has yielded negative returns this year, the Metropolitan Gilt Fund yielded a three-year average return of 23,03% between December 2004 and December 2007.
Deon van Zyl (pictured right), portfolio manager at MetAM managing the Metropolitan Gilt Fund says high inflation has put the bond market under pressure – forcing investors to move out of bonds into equities. There is too much uncertainty on the current path of inflation to commit to any new bonds.
Van Zyl believes that while the decision regarding Eskom’s proposed 53% tariff hike is the wildcard that could put a dampener on inflation expectations, “inflation is likely to peak over the next couple months. Investors must first believe that inflation has reached a tuning point before a bond bull market can begin. But ahead of that, we still expect one or two rate hikes,” says van Zyl.
The fund was originally launched as an income fund, but converted to a gilt fund last year in a bid to maximise investor returns from both capital growth and income.
The Micropal Fund Awards assess funds based on a relative risk-adjusted ratio. The performance figures are calculated on a single-price basis, with income reinvested.
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