Coronation Money Market Fund

PERFORMANCE

The Fund generated a return (net of management fees) of 1.67% for the second quarter of 2026 (Q2) and 7.09% over a rolling 12-month period. This return is ahead of the three-month Short-Term Fixed Interest (SteFI) benchmark return of 6.84% over the one year.

POSITIONING AND OUTLOOK

SA headline inflation increased to 4.5% year-on-year (y/y) in May from 4.0% y/y in April, while core inflation rose to 3.8% y/y from 3.6% y/y. The fuel index leapt up as the second successive petrol-price shock fed through, and housing and utilities firmed further ahead of the 1 July 2026 municipal tariff increases. Food and non-alcoholic beverages inflation continued to ease, providing some offset, but the firmer core inflation print suggests the energy shock was beginning to broaden into underlying prices.

The South African Reserve Bank (SARB) raised policy rates by 25 basis points (bps), moving the repo rate to 7.00% from 6.75% at the May Monetary Policy Committee (MPC) meeting. The main reason for the hike was to contain inflationary shocks from rising fuel prices and limit the risk of second-round effects. The SARB also lifted its 2026 inflation forecast to 4.4% from 3.7% in March and lowered its growth projections from 1.4% to 1.2%. The MPC reiterated its commitment to returning inflation to the 3% target over time. However, it also flagged upside scenarios, including a prolonged geopolitical conflict, El Niño, and non-linear pass-through effects, as potential catalysts for further tightening.

Fixed income markets formally transitioned to using the South African Rand Overnight Index Average (ZARONIA) reference rate for floating rate instruments during the quarter, which came into effect on 1 May 2026. The 3-month Johannesburg Interbank Average Rate (Jibar) publication is scheduled for cessation by 31 December 2026. The ZARONIA index increased by 27bps to 6.87%, following the repo rate hike. The short-end NCD curve (0-6 months) increased, on average, by 20bps as the front end of the curve had to price in a more hawkish SARB than investors expected at the start of the quarter. T-bills remain a good source of yield pickup relative to NCDs.

During Q2, the Fund increased its exposure to one-year NCDs and nine-months T-bills. The search for yield pickup in the primary credit auctions continues, as evidenced by the strong demand the auctions garner. In our view, new issues remain expensive, and the Fund has therefore focused on selected secondary-market credit opportunities. While we have found a few attractive options, overall credit exposure is expected to decrease gradually from here.

We remain cautious by investing only in instruments that are attractively priced relative to their underlying risk profiles. Capital preservation and liquidity remain a key focus for this Fund.

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