The problem with a 12% yield
Where I Am? | Viewer ==> The problem with a 12% yield

Allan Gray Unit Trust Management

  Allan Gray Unit Trust Management   Q2 of 2024 | 2 years ago

The notion of a government bond trading at a 12% yield can sound very appealing, but it poses several issues. The first is for the bond investor. To own a government bond at a 12% yield does not mean one is earning 12% per annum. On the contrary, while the South African government 20-year bond has traded at an average yield of 12.1% this year, the total return for a holder of this bond over that period has in fact been marginally negative. The reason for this is that while this bond started the year at 11.5%, it last traded at 13%. Put simply, one has been taking capital price knocks along the way, which eat away at one’s return as the bond’s market value is made cheaper. Another way to think about this, as put forward by South African Reserve Bank Governor Lesetja Kganyago at the September Monetary Policy Committee meeting, is that bond investors are essentially asking for more butter and jam to spread on the proverbial South African bread. The yields are rising.


SA - MA - I
SA - E - G
SA - E - LC
G - MA - F
SA - IB - VT
G - E - G
SA - MA - F
R - MA - F
SA - RE - G
SA - MA - HE
Did You Know ?

In 2020, Cannon Asset Management, was bought by Seriti Capital Partners, after the transaction its s retail unit trusts dissappeared from retail.

Nedgroup Investments does not have internal fund managers per se, it select establised asset managers to manage their unit trusts funds.

Asset manager Coronation saw a need for a shariah-complient leaning asset managemnt and in 2002, founded a standalone manager Kagiso AM (now Camissa AM).

More Activities & News
Aluwani Snatch Afena

Activity Review for Sygnia

Activity Review for Satrix

Old Mutual Activity Review for 2020 - 2023

Prescient Funds Activity Summary 2020 - 2023

2020-2023 Manco Review: Momentum

More Opinions & Views
Navigating the impact of world events on your investments

Saving in a rising interest rate environment

Challenges and opportunities with South Africa’s retirement fund system

THE SYSTEMATIC DECLINE OF ACTIVE FUNDS

The magnificent middle

Disclaimer
Our unit trusts prices captured in and around the end of each month and are rounded off to the nearest full 1 cent.