Inflation-X

Inflation-X provides direct exposure to inflation-linked bonds issued by the South African Government. Inflation-X aims to track the performance of the Government Inflation Linked Bond Index (“GILBx”) and is listed on the JSE, providing a seamless and cost effective way to invest in Government inflation linked bonds.

The underlying portfolio consists of the four Government Inflation Linked bonds. Any new issuances from National Treasury may be included in the fund and any existing bonds with less than one year to maturity will be excluded.

Inflation Linked bonds provide investors with both a hedge against inflation as well as real yield. The product should therefore appeal to investors who wish to hedge out uncertainty regarding inflation as well as to those who target a real rate of return when investing.

Inflation-X will pay interest to investors quarterly. The initial amount invested will increase in line with inflation, as represented by changes in the consumer price index published by Stats SA, thereby preserving the capital investment in real terms. The interest amount is also adjusted for inflation, and thus provides investors with a fixed rate return (real return) plus an amount to compensate them for inflation. Please see the brochure below for a simple illustration as to how the initial investment and interest are adjusted for inflation.

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