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• Winners of certificates
• Raging Bull Award winners

Allan Gray claimed the Raging Bull Award for the best domestic management company of 2011 for the fourth year in a row at this week’s awards ceremony in Cape Town.

The manager also received a Raging Bull Award for the top-performing domestic fixed-income fund over three years for its Bond Fund.

Allan Gray collected three certificates: two for its Bond Fund and one for its Allan Gray-Orbis Global Equity Feeder Fund, which was the top performer on a risk-adjusted basis in the foreign equity general sub-category over periods up to five years. This fund feeds into an offshore fund managed by Orbis – Allan Gray’s Bermuda-based sister company.

In Allan Gray’s latest quarterly commentary, it describes 2011 as “a tumultuous year”. In 2010 and early in 2011, a number of Allan Gray’s funds lagged their benchmarks, because the manager reduced its exposure to equities when the share markets continued to perform well.

Jeanette Marais, the director of distribution and client services at Allan Gray, says 2011 can be seen as a good example of how one needs to be patient to enjoy the fruits of investing contrary to the crowd.

“There can be long, frustrating periods when the market momentum moves against you, but when the rewards come, they can come quickly. Unfortunately, it is very hard to know when these rewarding patches will occur and for how long they will endure.

“We believe that most investors in our funds who subscribe to the funds’ objectives will be best served by patiently riding out the frustrating periods, so they can be sure of not missing the rewarding patches, which can contribute meaningfully to long-term returns,” Marais says.

Allan Gray’s bad year in 2010 is reflected in the ranking of its funds relative to their peers over three years, but the performance of its funds remains strong over the one- and five-year periods and longer.

Allan Gray’s longer-term track record is a result of its “valuation-based” investment approach and bottom-up asset allocation. It allocates to securities it believes will out-perform cash. Once it exhausts these securities, it invests in cash (within a fund’s mandate) until the right opportunities arise.

The manager targets shares that are trading well below what the company believes are their intrinsic value (or the value a prudent investor would pay for them) and earnings potential. Once the prices of these shares return to fair value, the shares can deliver good long-term returns.

As its investment approach includes a margin of safety, Allan Gray’s performance relative to that of other managers is particularly strong during periods characterised by market downturns, such as the severe one of 2008.

In the PlexCrown Fund Ratings, Allan Gray obtained an overall average score of 4.500 for periods up to five years to the end of December last year. This score was based on the PlexCrown ratings of its indivi-dual funds.

Allan Gray has six funds that qualify for PlexCrown ratings. Its Bond Fund, Balanced Fund (domestic asset allocation prudential variable equity) and Orbis Global Equity Feeder Fund (foreign general equity) each achieved the highest rating of five PlexCrowns. The other three funds achieved the next-highest rating of four PlexCrowns.

When its average PlexCrown ratings in various broad sectors were compared with those of other local managers, Allan Gray was top in the rankings for the management of both foreign funds and domestic funds. Notably, it was joint-first in both the domestic fixed-interest and the foreign equity sector rankings.

Allan Gray has announced that one of its five leading fund managers, Delphine Govender, will leave the company at the end of March to pursue personal interests.

Allan Gray’s equity and balanced portfolios are notionally divided between Govender and four other portfolio managers. The portfolios will now be re-allocated among the remaining four portfolio managers: Ian Liddle, Duncan Artus, Andrew Lapping and Simon Raubenheimer.

NEDGROUP, CORONATION ARE RUNNERS-UP

Nedgroup maintained its second place in the domestic management company rankings at the end of last year, but Coronation ousted Prudential from the top three.

Nedgroup, which has been in second place for four quarters in a row, achieved an overall average PlexCrown rating of 3.786.

Nedgroup outsources the management of its funds to what it describes as the “best of breed” managers, and a number of its funds are managed by successful boutique or small independent managers.

One of these managers, Kokkie Kooyman of Sanlam Investment Management, earned Nedgroup a certificate for its Financials Fund over three years to December 2011.

Nedgroup has 13 funds that qualify for PlexCrown ratings.

The Financials Fund and the domestic equity Value Fund achieved the highest rating of five PlexCrowns.

The following funds each obtained four PlexCrowns: the domestic Bond Fund, the Rainmaker Fund (domestic equity), the Quants Core Equity (domestic equity), the Entrepreneur Fund (domestic equity smaller companies), the Mining and Resources Fund (domestic resources and basic industries), the Managed Fund (domestic asset allocation prudential variable equity), the Bravata Worldwide Flexible Fund (foreign asset allocation flexible), the Global Balanced Feeder Fund (foreign asset allocation flexible) and the Global Equity Feeder Fund (foreign equity general).

The risk-adjusted performance of its funds put Nedgroup in joint-third position among its peers for the management of fixed-interest funds and in fifth position for domestic equity funds. This put it in second position among its competitors for the management of domestic funds.

For the management of foreign funds, Nedgroup was placed joint-third overall. It was in joint-third place for the management of its foreign equity fund and in joint-fourth position for the management of its foreign asset allocation fund.

Coronation moved into third place in the fourth quarter of last year, with an overall PlexCrown rating of 3.625.

Coronation ousted Prudential, which, until the fourth quarter, had been in either second or third position in the management company rankings for all but three quarters over the past four years. Prudential slipped into fifth place, after Investment Solutions.

Coronation has a bottom-up approach to stock-picking: it invests in shares based on their fundamentals rather than because they are in a particular market sector or region.

It buys securities on a long-term view and is a high-conviction manager – it takes big bets on the securities it believes will perform well.

Coronation’s Industrial Fund won a certificate for the best domestic equity industrial fund.

Coronation has 13 rand-denominated funds that qualify for a PlexCrown rating.

Two of the funds, the Balanced Plus Fund (domestic asset allocation prudential variable equity) and the domestic Equity Fund, achieved the top rating of five PlexCrowns each.

Six of its funds achieved four PlexCrowns each.

These PlexCrown ratings gave Coronation the following places among its peers in the different broad sectors: joint-sixth in domestic real estate, seventh in domestic asset allocation and domestic fixed interest, and eighth in domestic equity.

In the foreign sectors, Coronation was in joint-third position in foreign equity and was joint-fourth in the foreign and worldwide flexible sector.

Coronation was placed fourth among its peers for the management of domestic funds and third for the management of foreign funds.

Ranking of domestic management companies to December 31, 2011

1. Allan Gray: 4.500

2. Nedgroup Investments: 3.786

3. Coronation: 3.625

4. Investment Solutions: 3.375

4. Prudential: 3.375

6. RMB: 3.361

7. Stanlib: 3.343

8. Oasis: 3.125

9. Investec: 3.057

10. Old Mutual: 2.917

11. Absa: 1.917

Source: PlexCrown Fund Ratings