Page 165 - Profile's Unit Trusts & Collective Investments - March 2026

Fund manager interviews Chapter 9

PortfolioMetrix BCI Dynamic Income Fund
Sector: South African–Multi Asset–Income Unit Trust
Awards
Portfolio manager: PortfolioMetrix Asset Management 2026
Benchmark: STeFI Composite Index For performance to 31 December 2025
WINNER
Returns to investors 1 year 3 years
PortfolioMetrix BCI Dynamic Income Fund 19.66% 15.30%
Sector Average 11.18% 10.6%
Inflation (CPI) 3.60% 3.91%
ProfileData performance stats to 31 December 2025: CAGR with dividends reinvested

Describe your investment universe
The PortfolioMetrix BCI Dynamic Income Fund’s investment universe incorporates the full
spectrum of South African fixed income, including corporate credit and inflation-linked bonds.
These instruments all focus on delivering a steady and reliable flow of interest payments (coupons);
however, they all make these payments on a different basis such as reference rates (inflation or inter-
bank lending rates), or on a fixed-value basis. It is our job to assess the value of these different types
of cash-flows and allocate investor capital efficiently and responsibly.
Importantly the strategy does not invest in unlisted credit, nor does it allocate to South African
listed property or speculate with offshore exposure. These exclusions are deliberate and ensures
our strategy is simplified for investors to understand, and do not introduce unrewarded risks to the
portfolio.
Comment on your investment year (January - December 2025) from a fund manager’s point
of view
2025 was a remarkably strong year for South African fixed income, despite periods of heightened
volatility. The uncertainty triggered by the “Liberation Day” tariff shocks in April, together with
concerns around the stability of the GNU following the budget debacle, tested investor conviction,
but markets recovered decisively into year-end. Those who held their nerve were well rewarded.
By remaining disciplined and dynamic within our process, the fund delivered 19.6% for the year,
outperforming the peer average by over 8%.
A key driver of performance was the fund’s exposure to South African government bonds.
Improved terms of trade, supported by strong precious metal prices and subdued oil, contributed to
a firmer rand and contained inflation. Low and stable inflation, combined with attractive real yields,
created a compelling opportunity set with favourable risk-adjusted returns.
Policy developments further supported the asset class. SARB’s commitment to a lower inflation
target, alongside the repo rate-cutting cycle seen through the year, reinforced credibility and
strengthened the case for duration. South Africa’s removal from the FATF grey list and its first
sovereign rating upgrade from S&P in nearly two decades improved the confidence backdrop, while
foreign investors increased their holdings of local bonds in recognition of these positive shifts.
We approach portfolio construction with a strong risk-management mindset, maintaining exposure
to high-quality issuers and preserving ample liquidity. This discipline allowed us to navigate periods of
political and global uncertainty while remaining positioned to benefit from improving fundamentals,
ultimately converting a supportive backdrop into meaningful gains for our investors in 2025.
In terms of risk management, what methods or strategies are you able to use to protect your
clients’ investments?
Our approach to risk management is centred on optimising returns while maintaining downside
protection. We focus on instruments that offer strong rewards as interest rates decline but, more
importantly, have compelling entry prices that ensure investors are rewarded even if rate cuts do
not materialise. Identifying the right entry points across our investment universe is a key part of our
strategy, allowing us to capitalise on mispriced opportunities.

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