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Sunday, 26 June 2016

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Guardian Acuity realigns investment portfolio

The Guardian Acuity Money Market fund which is over four-years-old, has returned 48.44% to investors. This is an annualized return of 11.37%. The fund invests in government securities, fixed deposits and commercial papers and provides for easy withdrawals with no penalties.

The Money Market Gilt fund which was launched in March last year has returned 7.94% since inception to investors and invests only in government securities and related products. Both funds are tax-free for investors.

Fund Manager for Guardian Acuity Money Market Fund and the Money Market Gilt Fund, Sashika Wickramaratne said, "The interest rates have elevated and will remain at prevailing levels if the government can attract foreign funds into the planned bond issues."

"The IMF has approved US$1.5 billion under its Extended Funding Facility (EFF), which will provide temporary relief for foreign debt repayments falling due in the next few months.

As the IMF funds will come in tranches, the government will be compelled to go for a sovereign debt issue," he said.

According to Wickramaratne, even though the government could meet the debt repayments with further foreign borrowings and manage the fiscal pressure with the recent tax increases, there is a lower probability for rates to trend down if inflation picks up in the next couple of months given the recent tax increases and rupee depreciation.

"In this context, interest rates will remain at these levels in the next 12 months and have realigned our portfolio by investing in money market instruments of longer tenure."

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