Northstar BCI Income Fund

This low-risk fund is ideal for investors who require regular and stable income that targets inflation beating returns over the long-term, while actively managing risk of capital loss in the short-term. The recommended investment time horizon is 1-3 years. Managed in accordance with Regulation 28.

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Fund Performance

Northstar BCI Income Fund

Who should invest

This low risk fund is ideal for investors seeking consistent above cash and inflation returns whilst generating a healthy income from a diverse portfolio of actively managed income assets. This fund is managed in accordance with Regulation 28, making it suitable for retirement capital. An investment time horizon of at least 3 years is recommended.

Returns reflected below the chart are annualised. Source: Bloomberg, MorningStar and Northstar Asset Management.

Horizon:

  • 3 Years
  • 5 Years
  • 7 Years
  • 10 Years
  • SINCE INCEPTION
FUND RETURN

Benchmark Return

Outperformance

Benchmark Return

Outperformance

  • Provides investors with regular and stable income.
  • Targets inflation beating returns over the long-term.
  • High liquidity profile and well diversified across asset classes.
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Invest with Northstar directly

We can assist you with making direct investments but without financial advice. Direct investments via Northstar are subject to certain minimums.  Simply get in touch with our client service team by emailing admin@northstar.co.za

Speak to your financial advisor

Northstar’s funds are available via all the major local and offshore LISPS (linked Investment Services Providers). Please contact us for further information on how to invest via a LISP should that be your preference.

Requirements For This Fund

  • R 10 000
  • R 500
    • Certified Copy of both sides of ID Document with 3 specimen signatures.
    • Proof of Address (not older than 3 months) e.g. utility bill, rates, Telkom.
    • Proof of Banking details (not older than 3 months).
    • SARS document containing name and tax number.
  • Our unit trust range can be accessed via a number of platform providers. Please contact us for further information.

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Further Reading

Commentary for the quarter ended 31 December 2024

Performance Review

Quarterly Performance: In the fourth quarter of 2024, the Northstar Income Fund achieved a 3-month return of 1.57%, surpassing its peer group’s average return of 1.53%.

The primary drivers of this performance were:

Inflation-Linked Bonds: A 54% allocation to inflation-linked bonds contributed 54 basis points (bps), with significant returns from I2025, FRBI25, and R210 bonds.

Global Assets: Through a 5% holding in the Northstar Global Income Fund, which has a 71% exposure to US Treasuries (2-year average maturity) and 25% to high dividend stocks yielding 4.0%, added 38 bps.

Floating Rate Notes, fixed bonds and Gold: Floating rate notes with a 16% weighting, fixed bonds with a 25% weighting, and the Newgold ETF with a 3% weighting, contributed 35bps, 24 bps and 20 bps, respectively, rounding out the quarter’s gains.

Annual Performance: Over the full year, the fund’s return was 10.16%, in line with peers but notably outperforming inflation by 7.1% and the Cash plus benchmark (SteFI Callx110%) by 1.2%. This performance underscores the fund’s ability to deliver real returns and exceed cash-like investments.

Market Outlook and Portfolio Positioning

Economic Backdrop 2024: The year saw a gradual decline in inflation rates, stabilisation in growth, and a cautious monetary policy from the South African Reserve Bank (SARB). Despite global economic uncertainties, South Africa’s economy showed resilience, particularly in managing inflation expectations.

Economic Expectations for 2025:

Inflation: Expected to remain moderate with potential for slight increases due to global influences but still within the SARB’s target range.

Interest Rates: A shallower interest rate cutting cycle is anticipated, which supports our strategy of holding floating rate notes as they offer better returns in a stable interest rate environment.

Growth: Growth forecasts are cautiously optimistic, supported by policy reforms and infrastructure spending, which could benefit the bond markets, which is trading on attractive yields.

Inflation-Linked Bonds: With the maturity of I2025 on 31 January 2025, funds will be redeployed towards new issues at the front of the inflation-linked curve to continue providing unit holders inflation protection.

Floating Rate Notes: Enhanced focus here given the interest rate outlook, offering a buffer against rate volatility.

Fixed Bonds: With yields trading at attractive levels, a portion of the maturing I2025s will be considered for purchases of bonds in mid to long dated maturities, enhancing the yield and return expectations for the portfolio.

Global fixed income: Increase duration through the Northstar Global Income Fund with longer dated maturities offering above average real returns.

Gold and Commodities: Maintain a modest holding to hedge against currency and economic shocks.

Fund strategy and future outlook

The Northstar Income Fund has demonstrated its capability to deliver consistent returns while managing risk, with a focus on high-quality assets including government bonds and senior bank paper. The fund’s yield stands at 9.5% with an average maturity of 3.3 years and a modified duration of 2.3, providing a balance between yield and interest rate sensitivity.

As we approach 2025, our strategy remains centred on capital preservation and income generation in a potentially volatile but growth-oriented economic environment. With a gross expected return of 9.6% and an average standard deviation of 2.9%, the fund is positioned to continue offering low-risk, inflation-beating returns.

Quarterly Fund Video as at 31 December 2024

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About This Fund

Latest Allocation

  • Fixed Income
  • Cash
  • Equity
  • Alternatives
Management Date
22 July 2014
Sector
South African - Multi Asset - Income
Fund Size
R 797 million
Minimum Investment
Lump sum: R 10 000
Monthly: R 500
Latest Distribution
1.31 cpu (31/12/2024)
INVESTMENT MANAGEMENT FEE
0.85% p.a. (Excl. VAT)
Risk Profile
Low
Allocation
Time Horizon
1-3 Years
Regulation 28
Yes
Benchmark
110% STeFI Call Deposit
Fund Classification
South African - Multi Asset - Income

* This is the date Northstar began the management of the fund