Overweighting SA bonds and property pays off handsomely for STANLIB Fixed Income Fund in Q3

Globally, central banks cut rates and this helped local bonds. The STANLIB Flexible Income Fund was already holding a sizeable overweight in SA bonds and SA property, which paid off handsomely for clients in the quarter. The team was not surprised by the SARB’s modest 25 bps rate cut, but expects a series of cuts to mid-2025, especially as SA’s inflation rate is expected to fall below 4% for the rest of the year. The bond rally is expected to continue: the Fixed Income team estimates fair value for the 10-year SA government bond at 9.75% vs the current 10.35%. Sylvester says the next boost for bonds is likely to come from the Medium-Term Budget Policy Statement late in October. The fund’s one-year return was 17.8%, which is 8.3% above its benchmark.

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