Old Mutual Unit Trusts has launched a new enhanced money market fund, the Old Mutual Interest Plus Fund, which aims to deliver returns in excess of those offered by money market funds and similar levels of liquidity without significantly increasing risk.
In addition to investing in money market instruments, this fund can also include short-term debt instruments in its portfolio to offer investors a higher return over time without taking on too much additional price volatility.
Uniquely positioned to fill the gap between money market and income funds, it has a maximum average duration of 365 days, compared to the 90-day term to maturity for money market funds and two-year duration for income funds. This is important because the average duration for a portfolio is a way of estimating the sensitivity of the value of a bond portfolio to changes in interest rates. Typically, the shorter the duration of a portfolio, the less sensitive it is to interest rate changes and consequently the less volatile its returns.
This fund suits risk-averse investors with a short-term investment horizon who want yields above those of money market investments, but also require high liquidity from their investment and cannot tolerate the higher risk associated with income funds. The fund distributes income on a monthly basis.
More about Futuregrowth
Futuregrowth Asset Management, the fixed income specialist within Old Mutual Investment Group SA (OMIGSA), manages funds across the full fixed income range with special expertise in corporate (non-government) bonds. They aim to maximise long-term investment returns by identifying, measuring and managing value-adding areas of fixed income investments. Their investment approach to fixed income assets gives them a competitive edge. The dedicated credit team applies rigorous analysis of company fundamentals and macro themes to assess the risk of debt default. Their established relationships with debt originators provide access to the best instruments at competitive prices, the benefit of which is passed on to investors.
For more information about the fund, view the fact sheet or contact your financial advisor.