This low-risk fund is ideal for investors who would like to diversify their investments offshore and require regular and stable income that targets US inflation beating returns over the long-term, while actively managing risk of capital loss in the short-term. The recommended investment time horizon is 3 years.
Investors looking to diversify in a low- risk offshore fund and that requires consistent above cash and inflation returns whilst generating a healthy income from a diverse portfolio of actively managed income assets, making it suitable for retirement capital.
An investment time horizon of at least 3 years is recommended.
To invest in the Offshore fund directly through Northstar email admin@northstar.co.za.
* It is the client’s responsibility to ensure the SARS requirements to transfer funds offshore are met however Northstar can put you in contact with a Foreign Exchange Service Provider to assist with these requirements.
US$ 1 000 Class C / US$ 300,000 Class B
For LISP access, please contact Alex Holmes at aholmes@northstar.co.za
The Northstar Global Income Fund delivered a steady 1-year return of 5.7%, outperforming the U.S. headline inflation rate of 3.0%. The primary gains were driven by investments in US T-Bills and high-yielding equities, including Bank of New York Mellon, Amgen, DCC, 3M, Tsingtao Brewery, and Goldman Sachs. Additionally, the fund’s exposure to Gold through the SPDR Gold Trust significantly boosted returns.
However, investments in Leggett & Platt, Hasbro, United Parcel Service, Canadian Tire Corporation, and Vail Resorts detracted from overall performance. Despite these challenges, the Northstar Global Income Fund achieved steady gains with lower quartile volatility compared to its peers in the EEA USD Cautious sector.
Global growth is moderating from its robust 2023 pace, but is stabilizing as global capital expenditure and European consumer spending increases, reducing dependence on U.S. demand. This shift is fostering a modest recovery in global manufacturing. While early-year inflation acceleration is fading, global core inflation is expected to remain near 3% this year due to tight labor markets and high wage gains, limiting disinflation in the service sector. Consequently, there has been waining expectations of aggressive policy easing, and higher-for-longer policy stances are anticipated. The outlook for the next 12 to 24 months remains uncertain, with skepticism about achieving inflation and rate normalization without weakening demand.
In the U.S., growth is expected to moderate in the second half of 2024, averaging 1.0%. Slowing wage inflation and stable consumer and business inflation expectations are aligning with the Fed’s 2% inflation target. The Fed is anticipated to cut rates at the December FOMC meeting and continue quarterly cuts in 2025, with the possibility of an earlier cut in September if labor market reports show significant weakening.
China’s GDP growth for 2024 is forecasted at 5.2% year-on-year, assuming quarterly growth returns to 4.5% in the second half. Risks include the ongoing drag from the housing sector and uncertainties in policy implementation. Reluctance for monetary easing due to currency and banking stability concerns may hinder efforts to return to a growth-supportive policy stance.
Against this backdrop, the Northstar Global Income Fund benefited from a predominant exposure to the front end of the treasury curve (average yield around 5%), global high-yielding equity (dividend yield ranging between 4% and 5% over the year), and Gold. Although the U.S. equity market performed very well, with the S&P 500 index gaining 22.7% for the year, the high-yielding equities in the Northstar Global Income performed in line with the iShares High Dividend Equity with a return of 8.34% versus 8.43%.
The Northstar Global Income Fund remains well positioned to benefit from lower interest rates with exposure to the highest quality credit in the U.S. markets through Cash, US T-Bills, and Treasuries (85.8% weighting) across the yield curve. The duration remains low at 1.4 and a 1.6-year maturity however, a more constructive view on lower Federal Reserve bank rates over the next couple of years highlights opportunities to extend duration. Recent purchases include holdings in 3-year, 6-year and 10-year treasuries and a 5% exposure to the global bond index. The global equity holdings remain low at 11.6% with the intention to increase the equity weighting as growth prospects improve.
The Northstar Global Income fund continues to deliver stable returns in the lower quartile volatility range versus peers, with the aim to outpace inflation by 2% on an after-cost basis.
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