Sanlam Investments East Africa Limited

Fund Fact Sheet Commentary – 31st October 2022

The Money Market Fund returned a gross yield of 0.9% in October 2022 and 11.3% over twelve months. The performance of the fund is supported by a greater allocation to high yielding deposit holdings. The Central Bank of Kenya re-opened a 5-year and 15-year bond in October at weighted average yields of 13.4% and 14.0% respectively. During this month the Central Bank accepted bids of up to 14.5% on a 25 -year bond auction breaching the 14.0% ceiling previously perceived as the upper yield limit. 

The Kenyan Shilling, depreciated by 0.5% during the month of October 2022 bringing the year-to-date depreciation at 6.8% on account of mismatch in dollar demand and supply. This has also been exacerbated by the rise of the US Dollar during this period. We expect further gradual currency depreciation across the region on account of increasing rates in developed economies and a projected stronger US Dollar. 

Kenya’s headline inflation edged up to 9.6% year-on-year (y/y) in October 2022 from 9.2% y/y in September 2022. There were significant price increases in food and transport categories, as well as the housing, water, electricity, gas, and other fuels category, which printed an increase of 15.8%, 11.6% and 7.1% y/y respectively. 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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