Cadiz Fund News – December 2024

CADIZ BCI MONEY MARKET FUND

The Cadiz Money Market Fund’s strategy reflects a well-considered approach to navigating the evolving interest rate environment. By locking in favourable yields, the fund has ensured stable and competitive returns, even as interest rates decline. This positioning allows it to capitalise on higher yields established during a period of elevated interest rates, while maintaining the liquidity necessary for money market investments.  As the interest rate cycle shifts, the fund adapts, effectively ensuring it remains an attractive choice for investors seeking short-term stability and incremental returns. Managed within its mandate constraints, the fund consistently outperforms its benchmark, the Alexander Forbes Short Term Fixed Interest (STeFI) Composite Index. It also diligently maintains adequate liquidity levels, while minimising return volatility. 

CADIZ BCI ENHANCED INCOME FUND

In November, the fund took advantage of opportunities to invest in corporate bonds to support a strategy of yield enhancement. Exposure to nominal and inflation-linked bonds served the fund well, contributing to the positive return delivered for the period. The fund continues to uphold its long-standing record of low volatility returns, prioritising wealth growth and limiting downside risks. Trading activity during the month was guided by cash flows and reinvestments, aligning with the fund’s objectives, and maintaining a prudent approach to portfolio management.

CADIZ BCI ABSOLUTE YIELD FUND

The fund increased its exposure to nominal bonds during November, which, together with its exposure to inflation linked bonds, delivered positive returns for the period. The fund has thus maintained a strong performance position on a relative and absolute basis for both the near and medium term. Its diversified exposure to floating rate notes has once again stood the fund in good stead despite the declining interest rate environment. Trading activities during the month included deploying cash, reinvesting maturing instruments and managing duration to align with the investment strategy and market outlook. The fund remains actively managed by the team to capitalise on opportunities and manage prevailing risks.

CADIZ BCI BOND FUND

The FTSE/JSE All Bond Index returned 3.03% in November, as local bond yields declined on the back of moderating inflation, improved sentiment towards the political environment and a supportive global economic backdrop. The fund continues to build on the positive returns achieved for the year thus far and is positioned to capitalise further on opportunities presented in the nominal bond environment. It remains primarily invested in government bonds, strategically positioning its duration and exposure levels to align with the current investment outlook.