Our analysis shows that an aggregated portfolio, comprised of a combination of active bond fund holdings, has a large "de facto" passive GOVI index core component. This is accentuated in larger funds.
Given the limited investible bond universe in South Africa, it is far more cost effective to combine a core GOVI Tracker with a specialist active bond fund. This active fund should have a limited weighting in GOVI counters and a much larger weighting in excess return generating instruments, such as corporate bonds.
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