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Investment views

Investec Global Multi-Asset Income Fund: a core defensive total return fund

22 March 2018
By John Stopford, Portfolio Manager and Jason Barbora, Assistant Portfolio Manager

Seeking to limit downside risk at times of market turbulence

“Whilst we believe the equity bull market is not over given strong current economic and earnings growth, it appears to have entered a more dangerous phase, with less supportive monetary policy, stretched valuations, ageing growth dynamics and potential inflation risks. It is typical for the latter stages of a bull market to be characterised by higher volatility ahead of an eventual bear market. To navigate a less straightforward environment requires a more thoughtful approach, and the Investec Global Multi-Asset Income Fund has proven itself to be able to navigate these recent and more challenging conditions effectively.”

John Stopford, Portfolio Manager

Why choose this fund?

A defensive, diversified portfolio with exposures tactically adjusted to suit a changing environment

Targets ‘bond-like’ volatility, focusing on limiting downside risk

Resilient portfolio built from the bottom up aiming for attractive income
with capital growth over the long term

Recent portfolio activity

  • Prior to the market sell-off in February, we sold 15% of equity futures whilst retaining upside participation through call options
  • Underlying equity exposure had a lower beta (92%) vs world equities providing outperformance versus the MSCI ACWI over the market correction in early February
  • Fund duration is near to the lowest in its history at c1.2 yrs reflecting concerns around inflation dynamics
  • High yield positioning is conservative, with the Fund only 0.3% in the lowest quality credits and the lowest overall HY weight in Fund’s history
  • We are overweight the yen which historically has strong defence attributes.

Performance through times of volatility

The performance of the Investec Global Multi-Asset Income Fund is shown below at times of high volatility of the S&P500 Index. Also shown is the performance of the five largest global multi-asset income funds by AUM from the same sector.

Figure 1: Focus on limiting downside risks – Guarding against systemic and event-based risks (rolling monthly drawdowns)

Past performance should not be taken as a guide to the future, losses may be made. Source: Morningstar, as at 31.12.17, NAV based, (net of fees, excluding initial charges), total return, in US$. Highest and lowest returns achieved over a rolling 12 month period since inception: 8.7% and -2.8%.


Figure 2: ‘Bond-like’ volatility

Past performance should not be taken as a guide to the future. Data is not audited. Source: Morningstar, as at 31.12.17. Returns are calculated on a NAV-to-NAV basis, with gross income reinvested. Market indices are gross of fees. Highest and lowest returns achieved over a rolling 12 month period since inception: 8.7% and -2.8%.

Figure 3: Annualised Performance

1 yr 6.0 6.9
3 yrs 3.7 2.1
Since inception 4.0 2.3

Past performance should not be taken as a guide to the future, losses may be made. Source: Morningstar, as at 31.12.17, NAV based, (net of fees, excluding initial charges), total return, in US$. Highest and lowest returns achieved over a rolling 12 month period since inception: 8.7% and -2.8%.


Important information

All information is as at 31.12.17 unless stated otherwise. Risk scatter source: Bloomberg, 1 month deposit rates for cash; 10yr Government bonds – generic sovereign yields; Investment grade bonds: BofAML Sterling Corporate & Collateralised All Stocks Index; BofAML US Corporate Index; BofAML Euro Corporate & Pfandbrief Index; BofAML Japan Corporate Index; High yield bonds: BofAML Asian Dollar High Yield Corporate Index; BofAML US High Yield Index; BofAML Sterling High Yield Index; BofAML Euro High Yield Index; Emerging market bonds: JP Morgan GBI-EM Global Diversified Index; JP Morgan EMBI Global Diversified Blended Index; JP Morgan CEMBI Diversified Broad Composite Index; Equity indices as stated. Asset allocation and yields as at 31.12.17. All information provided is product related, and is not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information without appropriate professional advice after a thorough examination of a particular situation. This is not a recommendation to buy, sell or hold any particular security. Collective investment scheme funds are generally medium to long-term investments and the manager, Investec Fund Managers SA (RF) (Pty) Ltd, gives no guarantee with respect to the capital or the return of the fund. Past performance is not necessarily a guide to future performance. The value of participatory interests (units) may go down as well as up. Funds are traded at ruling prices and can engage in borrowing, up to 10% of fund net asset value to bridge insufficient liquidity, and scrip lending. A schedule of charges, fees and advisor fees is available on request from the Manager which is registered under the Collective Investment Schemes Control Act. Additional advisor fees may be paid and if so, are subject to the relevant FAIS disclosure requirements. Performance shown is that of the fund and individual investor performance may differ as a result of initial fees, actual investment date, date of any subsequent reinvestment and any dividend withholding tax. There are different fee classes of units on the fund and the information presented is for the most expensive class. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. Where the fund invests in the units of foreign collective investment schemes, these may levy additional charges which are included in the relevant Total Expense Ratio (TER). A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The ratio does not include transaction costs. The current TER cannot be regarded as an indication of the future TERs. Additional information on the funds may be obtained, free of charge, at The Manager, PO Box 1655, Cape Town, 8000, Tel: 0860 500 100. The scheme trustee is FirstRand Bank Limited, PO Box 7713, Johannesburg, 2000, Tel: (011) 282 1808. Investec Asset Management (Pty) Ltd (“Investec”) is an authorised financial services provider and a member of the Association for Savings and Investment SA (ASISA). A feeder fund is a fund that, apart from assets in liquid form, consists solely of units in a single fund of a collective investment scheme which levies its own charges which could then result in a higher fee structure for the feeder fund. The fund is a sub-fund in the Investec Global Strategy Fund, 49 Avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg, and is approved under the Collective Investment Schemes Control Act.


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