The Old Mutual Institutional Short Term Interest Fund offers corporates an investment opportunity for their surplus cash – aiming to deliver superior returns, with high liquidity and low interest rate risk. This investment vehicle is aimed at corporate investors who are looking for a short-term lump sum investment of R20 million or above.
Why invest in this fund?
The fund aims to deliver a regular income and to outperform corporate bank deposits over time, while preserving capital and maintaining a high level of liquidity.
The fund is designed to alleviate three specific risks that corporates currently experience:
1. Credit risk
The fund invests in only the top five South African banks, government and government-guaranteed paper. These instruments have a maturity of three years or less and this gives corporates exposure to a broad range of instruments.
2. Interest rate risk
Interest rate risk is managed by limiting the term to maturity of fixed-rate notes. Fixed-rate notes, in line with normal money market funds, are limited to 13 months. If fixed-rate notes longer than 13 months are purchased, these are swapped for floating-rate notes, which substantially reduces the interest rate risk.
3. Liquidity risk
The fund offers a unique advantage to the corporate treasurer, to get exposure to longer-dated (maximum 3-year maturity), higher-yielding instruments, while still having access to one-day liquidity. (This is achieved by having a minimum of 25% of the fund in 3-month or less instruments.) This gives the corporate treasurer direct access to this unique investment strategy.
The fund has an official Global Credit Rating (GCR) of AA+ and is priced on a daily basis, using a mark-to-market methodology; hence liquidity is available on a T+1 basis.
View the Fund Mandate
Futuregrowth Asset Management (Pty) Ltd is the asset manager appointed by Old Mutual Unit Trust Managers (RF) (Pty) Ltd for the Old Mutual Institutional Short Term Interest Fund. View the applicable unit trust disclaimer.