Faced by huge uncertainty, SA’s bond market is not the most comfortable place to be right now. This makes it a time to consider other options. For many investors, money market funds will probably spring first to mind. They are not a bad alternative. Free of any risk of capital loss, they are on average yielding around 8.2% gross and 7.7% after costs. This compares with the after-cost yields of about 8.5%-8.75% that are offered by bond unit trust and exchange traded funds. The alternatives to bond funds do not end at money market funds. Income funds provide a big yield uplift with a fractional increase in risk. "Income funds are the preferred strategy at present," says Henk Viljoen, Stanlib’s head of fixed income and co-manager of the R23bn Stanlib Income Fund.
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