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Investec launches African bond fund

By on August 22, 2011

Investec has launched an African bond fund for co-heads of fixed income John Stopford and South Africa-based Andre Roux.

The Investec GSF Africa High Income Bond fund is a Luxembourg-domiciled SICAV with an indicative yield of 9.4%, based on the paper portfolio Stopford has been running.

The majority of its holdings are in South African sovereign and corporate debt, with currency exposure largely to the South African rand within the model portfolio.

There are also smaller positions in bonds from Kenya, Nigeria, Angola and Ghana.

In terms of credit quality, the portfolio has about one-third each in A- and BBB-rated debt, with the remainder split across the spectrum from BBB- to BB+.

David Aird, managing director of the UK at Investec, said the specialist fund has a flexible mandate, allowing the managers to run exposure to either local currency or dollar denominated debt.

He said: “South Africa is the most developed and most liquid market, but beyond that we have stepped out to the larger markets.”

The model portfolio has exposure to a range of established African economies.

The group said the debt markets across the region are attractive in terms of yield, while many economies were now well managed.

“The continent is benefitting from its huge natural resources endowment, as well as steady improvements in governance.

“Yields are attractive, underpinned by low levels of local and external debt and structurally lower inflation, while currencies stand to benefit from the secular improvements in their terms of trade.”

Investment Week