Allan Gray Bond comment - Sep 08 - Fund Manager Comment27 Oct 2008
Bond yields continue to decline. The market is pricing in inflation falling back into the target range of 3-6% within 12-18 months, with a corresponding fall in short-term interest rates. While we share the view that rates will decline, we remain concerned about inflation prospects - particularly because the rand exchange rate looks vulnerable. As a result, the Fund's portfolio is concentrated in shorter duration assets which offer significantly higher yields than long duration bonds.
Allan Gray Bond comment - Jun 08 - Fund Manager Comment30 Jul 2008
Bonds sold off sharply in June as inflation expectations continued to deteriorate. Higher oil and food prices were the main causes of this deterioration. However in the first few days of July bonds have rallied. One of the reasons for the rally may be the release of the reconstituted inflation basket. When the new basket comes into effect for January 2009 it could cut up to 2% off the inflation rate because of the lower weightings of food and fuel. Considering both risk and return we continue to see better value in the shorter dated, higher yielding, bonds as we believe inflation may be more persistent than is generally expected by the market.
Allan Gray Bond comment - Mar 08 - Fund Manager Comment23 Apr 2008
The yield curve remains extremely inverted, with short-dated bonds and deposits
offering significantly higher yields than long-dated bonds. The Portfolio is biased to
the short-end of the yield curve where we see more value.
Allan Gray Bond comment - Dec 07 - Fund Manager Comment17 Jan 2008
The yield curve remains extremely inverted, with short-dated bonds and deposits offering significantly higher yields than long-dated bonds. The Portfolio is biased to the short end of the yield curve where we see more value.