The Futuregrowth Infrastructure & Development ILB Fund, a specialist yield enhanced bond portfolio, forms part of Futuregrowth’s suite of developmental investments.
The Fund targets high cash returns through a combination of active, real and nominal interest rate risk management and yield enhancement by investing in listed and unlisted socially responsible and developmental assets. As a stand-alone investment, the Fund is not Reg. 28 compliant. The benchmark is the Barclays BESA SAGILB 15+.
The Fund aims to outperform the SAGILB 15+ by 1% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.
The Fund buys units in the Futuregrowth Infrastructure & Development Bond Fund (IBF). The underlying nominal interest rate risk in the IBF is hedged via derivatives to give the Fund inflation-linked exposure. Please note that there will never be any double dipping of fees.
The IBF, which invest in infrastructural, social, environmental and economic development sectors, may invest in a wide range of debt instruments including those issued by government, parastatals, corporates as well as securitised assets. The inclusion of assets is subject to credit committee approval. The IBF is allowed to invest up to 50% in unlisted credit and in addition, to invest in up to 5% equity assets (primarily through the Futuregrowth Development Equity Fund) subject to investment committee approval. The resulting effect is good risk-adjusted alpha generation over time.
In order to retain adequate liquidity and flexibility, and in the course of managing new investments, asset maturities and sales, and fund-flows, the IBF usually maintains a high degree of liquid and/or non-developmental assets. This facilitates transactions and/or client cash flow needs.
The IBF aims to provide investors with a vehicle that facilitates infrastructural, social, environmental and economic development in southern Africa and delivers on a variety of social impact requirements such as job creation, affordable housing, access to services and healthcare.