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Investec GS Global Bond comment - Dec 03
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Thursday, 12 February 2004
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Fund Manager Comment
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| The Fund is able to invest across the full spectrum of quality fixed income assets. It tends to employ a conservative strategy, focused on quality government bonds denominated in US dollars, yen, sterling and euro. However, it is also able to buy high quality corporate bonds in any of the major developed economy bond markets. The Fund's investment in currencies is an additional source of both potential returns and diversification to reduce volatility.
The manager generates returns in two ways: first through an active duration strategy, buying short or long dated bonds based on expectations of inflation and interest rate movements, and second, through asset allocation between different global bond markets and types of bonds.
The improved economic outlook leaves quality bond markets vulnerable to expectations of higher interest rates, which could cause prices to fall. As a result, the Fund has made a selective investment in high quality corporate bonds to improve yields and benefit from strengthening trading conditions. It has reduced the fund's sensitivity to interest rates by taking an underweight duration position to cushion the impact of a potential retreat in government bonds. |
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Investec GS Global Bond comment - Sep 03
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Thursday, 30 October 2003
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Fund Manager Comment
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| The fund invests in high quality government and corporate bonds predominantly denominated in US dollars, yen, sterling and euro. The fund's investment in currencies is an additional source of potential returns and diversification to reduce volatility.
Bond prices and interest rates respond to economic and political developments as well as to changes in an industry's conditions or an individual company's financial situation. We assess all three influences when deciding the fund's assets. When interest rates rise, bond prices fall but the higher interest income gained from buying new bonds benefiting from the new rates has the potential to boost returns thereafter. The fund can also make money by adjusting the fund's duration - buying longer-term or shorter-term bonds according to inflation and interest rate expectations.
The economic outlook is mixed: structural problems likely to hinder long-term growth, such as indebted consumers and excess production capacity in the US and a rigid labour market and the restrictive Growth and Stability Act in Europe, remain unresolved. However, these have been offset in the near term by the combined stimulus of 13 rate cuts by the US Fed over the past two and a half years, a weak dollar and a $350bn tax cut package, which have begun to spur stronger growth in the US and other major economies. Signs of economic recovery have prompted a correction in bond markets, which had become overvalued after a strong run in the first half of the year. However, despite short-term negative sentiment, low inflation and a bias by central banks to cut or keep interest rates stable works in favour of quality bonds and, as relatively secure assets providing a fixed income, they remain an attractive long-term investment. |
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Investec GS Global Bond comment - June 2003
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Tuesday, 12 August 2003
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Fund Manager Comment
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| The fund invests in high quality government and corporate bonds predominantly denominated in US dollars, yen, sterling and euro. By investing across currencies the fund both gains diversification and the prospect of profiting from currency appreciation.
Companies issue bonds for many purposes, among them to finance expansion and investment. By investing in highly rated corporate bonds, the fund aims to participate in the fortunes of a dynamic mix of companies world-wide. Bonds can be more secure than shares, since as creditors, bond owners have a priority claim on a company's assets. Developed world government bonds provide stable income, secured by the state.
Bond prices and interest rates respond to economic and political developments as well as to changes in an industry's conditions or an individual company's financial situation. We assess all three influences when deciding the fund's assets. When interest rates rise, bond prices fall but the capital loss can be cushioned by higher interest income gained from buying new bonds benefiting from the new rates. The fund can also make money by adjusting the fund's duration - buying longer-term or shorter-term bonds according to inflation and interest rate expectations. |
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Investec GS Global Bond comment - March 2003
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Thursday, 8 May 2003
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Fund Manager Comment
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| The fund invests in high quality government and corporate bonds predominantly denominated in US dollars, yen, sterling and euro. By investing across currencies the fund both gains diversification and the prospect of profiting from currency appreciation.
Companies issue bonds for many purposes, among them to finance expansion and investment. By investing in highly rated corporate bonds, the fund aims to participate in the fortunes of a dynamic mix of companies world-wide. Bonds can be more secure than shares, since as creditors, bond owners have a priority claim on a company's assets. Developed world government bonds provide stable income, secured by the state.
Bond prices and interest rates respond to economic and political developments as well as to changes in an industry's or an individual company's financial situation. We assess all three influences when deciding the fund's assets. When interest rates rise, bond prices fall but the capital loss can be cushioned by higher interest income gained from buying new bonds benefiting from the new rates. The fund can also make money by adjusting the fund's duration - buying longer-term or shorter-term bonds according to inflation and interest rate expectations. |
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Investec GS Global Bond comment - October 2002
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Monday, 25 November 2002
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Fund Manager Comment
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| The Fund invests in high-grade government and non-government bonds in all major currencies. Performance comes from the overall movements in bond prices, currency or income from these investments. It also comes from the way in which the fund managers structure the portfolio in terms of duration and exposure to currencies. From time to time, credit (i.e. corporate and other non-government) bonds may be re-rated against government bonds. The fund managers will also seek to benefit from this. In running the Fund, the fund managers will seek to add value through active management. This involves the control of the Fund's duration and its exposure to different levels of credit risk. In determining duration and exposure to major bond markets, the fund managers take account of likely trends in economies. In stock selection the fund managers look for bonds that are too cheap relative to the issuer's fundamentals. The fund managers may hedge currency exposures. Investec has built a team of 22 fixed income managers, analysts and dealers who work closely together to implement a highly structured investment process. The team's expertise in managing global and specialist fixed income portfolios was recognised by International Money Marketing, who voted Investec Fixed Income Manager of the year in 2000. |
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Investec GS Global Bond comment - September 2002
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Wednesday, 20 November 2002
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Fund Manager Comment
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| The Fund invests in high-grade government and non-government bonds in all major currencies. Performance comes from the overall movements in bond prices, currency or income from these investments. It also comes from the way in which we structure the portfolio in terms of duration and exposure to currencies. From time to time, credit (i.e. corporate and other non-government) bonds may be re-rated against government bonds. We will also seek to benefit from this.
In running the Fund, we will seek to add value through active management. This involves the control of the Fund's duration and its exposure to different levels of credit risk. In determining duration and exposure to major bond markets, we take account of likely trends in economies. In stock selection we look for bonds that are too cheap relative to the issuer's fundamentals. We may hedge currency exposures.
Investec has built a team of 22 fixed income managers, analysts and dealers who work closely together to implement a highly structured investment process. The team's expertise in managing global and specialist fixed income portfolios was recognised by International Money Marketing, who voted Investec Fixed Income Manager of the year in 2000. |
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Investec GS Global Bond comment - June 2002
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Monday, 9 September 2002
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Fund Manager Comment
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| June was a positive month for government bonds as investors sought "safe haven" investments at a time of volatile stockmarkets and/or fretted about the outlook for the global economy. Yields on 30-year and two-year US Treasuries, for example, fell by 0.11% and 0.38% respectively. Corporate bonds, by contrast, generally performed poorly as a result of concerns over accounting by prominent US companies such as Worldcom. Falls in stockmarkets provided a new catalyst for weakness in the US Dollar, which fell by more than 5% against the Euro.
The Fund outperformed its benchmark by a substantial margin. This was in part because of its longer-than-benchmark duration, in part because it was overweight to US Treasuries and in part because its exposure to US Dollar assets was largely hedged back into the Euro. The Fund also benefited from its holdings of Polish bonds: against this, positions in non-government bonds detracted from performance. Your Adviser remains optimistic about the outlook for global bond markets. Consequently the Fund will probably retain longer-than-benchmark duration. It will also continue to remain underweight to the US Dollar. The overvaluation of this currency, and the magnitude of the US current account deficit, suggest that the US Dollar has further to fall over the medium term. |
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Investec GS Global Bond comment (April 2002)
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Monday, 10 June 2002
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Media Comment
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| During April, a number of economic indicators, both in the USA and elsewhere, were weaker than had been expected. As a consequence, yields fell on government bonds in all Western markets. Short-dated bonds tended to outperform as investors looked for a slower tightening in monetary policy by the major central banks than they had previously. Agency bonds, and other AAA rated non-government bonds outperformed US Treasuries. By contrast, more low rated corporate bonds suffered as a result of the volatility in global stockmarkets. Concerns over the prospects for the US economy contributed to the weakness in the US$ against other major currencies.
Two factors ensured that the Fund outperformed the benchmark by a substantial margin. First, the Fund's duration was significantly longer than that of the benchmark positioning it to benefit from the fall in yields; second, the Fund benefited from its exposure to the US Dollar at a time when the currency was relatively weak. By the end of the month, the Fund was heavily overweight the Euro.
Your Adviser anticipates that global bond markets will continue to rally, substantially because of bond valuations. The Fund will probably remain underweight to the US Dollar, which appears vulnerable to further weakness. |
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Investec GS Global Bond comment - March 2002
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Tuesday, 14 May 2002
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Fund Manager Comment
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| March was a difficult month for global bond investors. Yields on 10-Year US Treasuries rose by 0.51% to 5.47%. Yields on 10-year bonds in Europe rose by around 0.3%. Yields on shorter-dated bonds rose even more sharply. These moves were a response to the mounting signs of economic recovery in the USA, and growing consumer and business confidence in Europe. Investors shifted capital away from "safe haven" assets such as government bonds and into riskier areas. Quality corporate bonds, with comparatively low A and BBB ratings outperformed. The major currencies traded in tight bands relative to each other.
The Fund underperformed the benchmark index through the month. This was because it had had longer-than-benchmark duration. Your Adviser cut the Fund’s duration as the prices of bonds fell. However, towards the end of March, the Fund’s duration was increased once more. The Fund was helped by its exposure to the A$, the NZ$ and the Swedish Krona, which outperformed.
In anticipation of a gradual economic recovery, your Adviser has bought lower rated corporate bonds for the Fund. Your Adviser considers that government bonds have been oversold and should rally in price, particularly in the USA. The Fund’s positioning reflects this. |
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