Coronation Global Strategic USD Income Fund Review 2023

When compared to other funds of a similar nature, the Coronation Global Strategic USD Income Fund provides excellent short-term returns. […]

Coronation

When compared to other funds of a similar nature, the Coronation Global Strategic USD Income Fund provides excellent short-term returns. The fund focuses on holdings that are neither listed on the JSE nor managed within South African borders. 

The fund makes investments in both developed and developing markets.  Coronation Global Strategic USD Income Fund’s investment strategy specifically excludes underdeveloped markets. The fund has a clear mandate that it works to fulfil, and it has demonstrated considerable competence over the course of its existence.

The fund’s fixed-income asset investment targets range from 75% to 100%. These assets include bonds, money market instruments, and other types of securities.

Investments are made in assets issued by foreign governments, banks, and other organizations. The fund may invest in riskier securities or growth-oriented assets, subject to certain restrictions. 

Growth assets, such as listed real estate, preferred shares, and other hybrid debt or equity instruments, may account for up to 25% of the fund’s total assets.

The fund aims to keep its exposure to the US dollar constant at 75%. Furthermore, the fund must use derivatives for effective portfolio management. As a result, the average term of the fund will not exceed 3 years.

The fund is intended for cautious investors who prefer to have their investments quoted in USD. The fund is also a fantastic choice for people looking to invest in the short to medium term. Despite the fact that the fund invests in a variety of currencies, the USD serves as its base currency.

More in-depth analysis of the Coronation Global Strategic USD Income Fund is provided below.

Coronation Global Strategic USD Income Fund summary 

Coronation Global Strategic USD Income Fund is a unit trust with a $489.14 million fund size and a net asset value (NAV) of 1249.86 cents. To initiate, a minimum investment of $15,000.00 is required.

The fund’s benchmark is 110% of SOFR, and it has outperformed it by 0.9% on average annually. Since its inception, the fund has grown by 24.9%.

Since its inception in 2011, the Coronation Global Strategic USD Income Fund has experienced an average annual increase of 2%. During the same time period, the benchmark achieved an average annual increase of 1.1%.

This shows how the fund was able to grow and how, since its inception, it has outperformed the benchmark by 12.2%. The fund’s investing strategy allows it to grow the capital invested while also maintaining the value of the capital invested.

The fund has been able to carry out its mandate and has consistently outperformed its benchmark over time. We explore the fund’s investments in greater depth. The assets in which the fund invests are detailed below.

Coronation Global Strategic USD Income Fund assets allocation by instrument type

AssetPortfolio %
Developed Market (Investment Grade) 73.4%
  Fixed Rate Bonds 48.9%
  Floating Rate Bonds13.4%
  Inflation Linked Bonds11.1%
Emerging Markets (Investment Grade) 9.3%
  Fixed Rate Bonds 8.8%
  Floating Rate Bonds0.5%
  Inflation Linked Bonds 0%
Developed Markets (High Yield) 0.3%
Emerging Markets (High Yield) 3.6%
Convertibles 5.3%
Listed Property 0.9%
ETF5.5%
Cash and Money Market 1.6%

The fund favours investments in developed economies and has over 50% of the fund invested in bonds from developed economies. Investments in emerging markets are made but make up the minority of the fund. The fund also prioritises high-yield bonds from emerging markets as it has invested over 7% of the fund in them. 

We demonstrate the investments made with the money that investors contribute to the fund. Below, we examine the organizations the fund invests in.

Top 5 issuer exposure of the Coronation Global Strategic USD Income Fund 

#ISSUERFund percentage
1United States Government Treasury35.4%
2Mexican Government2.9%
3Wells Gargo2.6%
4HSBC Bank2.5%
5Apple2%

The fund has most of its investments in corporations, and as of 2023, the fund invests 68% of the fund in corporate-issued money market instruments. 27% of the fund is invested in sovereigns in both developed and emerging markets. 

Advantages of the Coronation Global Strategic USD Income Fund 

  • Short-term and medium-term investments get the opportunity to earn above-average returns on investment through the fund. 
  • The fund is able to keep up with the US inflation rate and outperform it sometimes. 
  • The amount of fees paid to fund managers is moderate. 
  • Anyone can use the fund to invest. 

Disadvantages of the Coronation Global Strategic USD Income Fund 

  • The minimum amount that is payable is high considering similar funds in South Africa. 
  • Long-term investments won’t get greater returns than an investment that is structured to invest in growth assets. 

Conclusion 

The Coronation Global Strategic USD Income Fund invests in both income and growth assets with income assets making the majority of the fund. The fund is in turn able to generate favourable returns while growing the capital above the US inflation rate. Since the fund invests in income assets more, it is suitable for those that want a conservative that is held in USD.