This fund represents the best fixed income house view of Element Investment Managers. Company portfolio manager Jeleze Hattingh says the fund aims to achieve consistent outperformance of the money market benchmark (known as the Stefi). If it can’t materially beat the returns of a money market fund there’s not much point in the client taking the extra risk.At the same time, it also aims to preserve capital and to keep volatility acceptably low. Hattingh says this has been hard recently — over the period of Nenegate there was an unusually high 100 basis points increase in the 10-year government bond yield, leading to some quite considerable capital losses from the long bonds.But the fund is very short-dated, with a duration of 0.3, excluding the preference shares and property. Hattingh says it is not worth taking the capital risk of a 19-year bond yielding 8.5% when a one-year NCD yields 8.4%. It is a good fund for an investor aiming for a return of inflation plus 3%.Element is a smal...
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