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Old Mutual High Yield Opportunity Fund to be Capped

06 Dec 04           Liz Still

Feroz Basa 

Old Mutual High Yield Opportunity Fund (A)
Inception:04 Nov 1998
South African Equity
Fund Size:R 3,196.8m
Price Performance
12 months:13.73%
24 months:32.74%
More Details...

Equinox investors note: Old Mutual have agreed to keep the fund open to Equinox investors until further notice.

Old Mutual has announced that their High Yield Opportunity Fund, currently with assets under management of over R1.5 billion, will be closed to new lump sum investments on 31 December 2004. Only existing debit order investments will be permitted

The fund aims to provide the investor with a high level of dividend income (of not less than 5% on the initial investment), which is currently not taxed in the hands of private investors, coupled with capital growth.

'During the past year and a half domestic equities have surged on the back of confirmation of much improved economic performance and rising consumer confidence. The JSE All Share Industrial index has more than doubled since April 2003,' said the fund manager, Douw Steenekamp.

'This has had the effect of reducing the dividend yields currently being offered by most good quality shares to a level where it is simply no longer possible to achieve our target yield of 5% on new money invested in the portfolio without assuming an unacceptable level of risk. Having said that, our existing investors should continue to receive an attractive yield on the capital they initially invested with us,' he said.

The High Yield Opportunity Fund's supplemental trust deed makes legal provision for Old Mutual to close the fund to new investors.

Murray Anderson, the manager of investment marketing and sales at Old Mutual Asset Management said that the due to the immense popularity of the fund and its pleasing capital appreciation over the past two years, it has now reached a size where it it would be in the interests of existing investors that to close the fund to new investments. 'The Old Mutual High Yield Opportunity fund has consistently delivered a high level of tax-efficient dividend income as well as good capital growth at a moderate risk,' he said.

He said that Old Mutual would not permit new investors in the fund, or switches into the fund from other Old Mutual Funds. Only existing contractual investments would be permitted.

'While it is disappointing to cap this popular fund, we do have a number of excellent alternatives, including the Old Mutual Value Fund,' he said. 'Our Value Fund also uses the "value" style of investing and has similar investment objectives to the High Yield Opportunity Fund. It is also managed by Douw Steenekamp,' he said.

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