Ceylon Dollar Bond Fund delivers 10.3-pct dollar return in 2019

Dulindra-Fernando

Dulindra Fernando, CFA, Managing Director, Ceylon Asset Management

Feb 06, 2020 (LBO) – The Ceylon Dollar Bond Fund that invests exclusively in the Sri Lankan government issued International Sovereign Bonds (ISB), and SLDBs reported a strong US$ performance of 10.3 percent in 2019 to investors.

The January 2020 performance was 1.03 percent (annualised 12.18%) while the fund size reached 23 million US dollars as of 31 December 2019, according to Ceylon Asset Management Managing Director, Dulindra Fernando.

Ceylon Asset Management competes with international USD bond managers in operating the Ceylon Dollar Bond Fund (CDBF), Sri Lanka’s first international sovereign bond fund that navigates global market conditions.

The SL ISB rates were influenced last year by two US Federal Reserve rate cuts, the Easter bombing and a Presidential election.

“We expect Sri Lanka risk to mitigate following April elections. Declining bond yields provide an opportunity for investors to make capital gains on long term bonds,” Fernando stated.

“We anticipate that foreign and Sri Lankan investors alike will exploit this opportunity to secure attractive SL sovereign bond returns going forward.’’

The CDBF is managed by Ceylon Asset Management (CAM) while Deutsche Bank AG serves as the Trustee and Custodian of the fund.

Local individual investors who hold a Personal Foreign Currency Account (PFCA), Corporate investors with a Business Foreign Currency Account (BFCA) are eligible to invest in the fund. Investors can exit at any time without penalties, and repatriate in dollars.

The CDBF is the only dollar-denominated Unit Trust in Sri Lanka licensed by the Securities and Exchange Commission (SEC) and approved by the Central Bank.

The Fund Manager, CAM is an associate company of Sri Lanka Insurance Corporation Ltd and manages 7 other LKR Unit Trusts including equity funds and fixed income funds.

Regional Source of Investors for SL Sovereign Bonds
(10 Year ISB Issued in June 2019)