Sanlam Investments East Africa Limited

Fund Fact Sheet Commentary – 30th September 2022

The Money Market Fund returned a gross yield of 0.9% in September 2022 and 11.3% over twelve months. The performance of the fund is supported by a greater allocation to high yielding deposit holdings. Bond yields in Kenya edged up by an average of 25 basis points across the yield curve in Q3 2022. The Central Bank of Kenya (CBK) re-opened a 10-year and 15-year bond in September at weighted average yields of 13.9% and 14.0% respectively. The CBK Monetary Policy Committee (MPC) raised the Central Bank Rate (CBR) to 8.3% from 7.5% noting the potential domestic economic impact of sustained inflationary pressures and elevated global risks. 

The Kenyan Shilling, depreciated by 6.3% year to date as at end of September 2022 having depreciated 0.6% during the month amid tight dollar supply driven by increased import demand and the global strengthening of the US Dollar. We expect further currency weakness on account of increasing rates in developed economies and a projected stronger US Dollar. 

Kenya’s inflation edged up to a 5-year high of 9.2% year-on-year (y/y) in September 2022 from 8.5% y/y in August 2022. The rise was attributable to price increases in food and non-alcoholic beverages, transport and housing, water, electricity, gas, and other fuels. Inflation is expected to remain elevated, above the CBK’s upper target of 7.5% due to higher food related prices. The fund will seek to invest contributions and fund maturities in higher yielding assets given the rise in interest rates, improving the overall yield of the portfolio going forward.

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