Unit trust fund managers at the Raging Bull Awards ceremony held in Johannesburg this week celebrated their achievements after a year that surprised many managers with better-than-expected returns from various financial markets.
The awards were made on the basis of longer-term performance over the three- or five-year periods to the end of December last year – a period dominated by the 2008 credit crisis, the 2009 recovery and last year’s surprisingly good returns.
The awards, which turned 15 this year, are co-ordinated by Personal Finance, Plexus and ProfileData.
Paul Stewart, the managing director of Plexus, says few managers were bold enough to buy into the markets during the dip that followed the credit crisis, but those that did need to be congratulated.
Many of them took the honours at this week’s awards ceremony, and the value style and more cautious approaches were dominant among their investment philosophies.
Allan Gray, the leading manager of rand-denominated unit trust funds, has a focus on investing in securities that are undervalued relative to what it regards as fair value, while Prudential, which took third position in the management company rankings, also has a clear value bias. These managers usually avoid the worst losses in times such as those that followed the recent credit crisis.
The runner-up in the management company rankings was Nedgroup, which outsources the management of its funds to successful independent managers.
Allan Gray took a view at the beginning of last year that local equities were not offering much value. This stance saw the manager under-performing its peers quite dramatically over 2010, but it still dominates on its longer-term performance over the five-year period.
The Marriott Dividend Growth Fund was the top-performing broad-based equity fund (that is, the top performer among funds that invest across the market rather than in any specialised sector of it) over three years to the end of December. This fund is a cautious investor that targets companies that are expected to pay reliable dividends and buys them at the right price on the JSE.
Another Raging Bull is awarded to the top-performing domestic equity general fund on a risk-adjusted basis, and this year the award was made to Absa’s Select Equity Fund, which relies on good stock-picking in a “pragmatic, value-oriented investment style”.
The best asset allocation flexible fund (with no sub-category restrictions on asset allocation) on a risk-adjusted basis for periods up to five years ending December last year was the PSG Flexible Fund, which also has a strong focus on buying undervalued shares. It bought into equities during the market crash.
A broker fund, the Dotport Stable Prudential Fund of Funds, was the top-performing asset allocation prudential fund (the sub-category in which equity exposure is limited to 75 percent) on a risk-adjusted basis for periods up to five years ending December last year. The fund adopted a cautious exposure to equities ahead of the market fall that followed the 2008 credit crisis.
The certificate for the best-performing prudential fund over three years went to Coronation’s Balanced Defensive Fund, which is a low equity asset allocation fund that is restricted to investing no more than 40 percent in equities, unlike other asset allocation funds that can go as high as 75 percent in equities.
And in foreign markets, the award for the top global equity fund went to RE:CM, a small, independent Cape Town-based value manager that, like the world’s most successful investor, Warren Buffett, is fearful when others are greedy and greedy when others are fearful.
The award for the top offshore asset allocation fund was made to Ashburton for the performance of its Replica Euro Asset Management Fund, which, in terms of its mandate, invests no more than 50 percent in equities.
Investec was named the offshore manager of the year at this week’s awards ceremony. Investec attributes its success to its strong investment team and a skilful re-entry into more risky assets after the 2008 financial crisis.
HOW THE RAGING BULL AWARDS ARE DETERMINED
The Raging Bull Awards recognise the top performers on both outright performance and risk-adjusted performance.
The top funds on outright performance over three years in most domestic, rand-denominated foreign and offshore unit trust sub-categories receive a certificate, and Raging Bull Awards are made in the sub-categories or sectors that attract the most funds.
Other certificates and Raging Bull Awards – particularly for the asset allocation funds and the more popular sub-categories – are awarded on the basis of risk-adjusted returns over five years, as measured by PlexCrown Fund Ratings. This is because risk management is a major factor in determining a fund’s success.
To qualify for a Raging Bull Award or a certificate, or for the PlexCrown ratings, a fund must:
* Be open to retail investors.
* In the case of an award made on the basis of straight performance, be in a domestic unit trust sub-category (including South African-domiciled foreign funds) that has at least five actively managed funds with histories of three years or more.
* In the case of an award made to a foreign-domiciled (non-rand-denominated) fund on the basis of straight performance, be in a sub-category that has at least seven actively managed funds with histories of three years or more.
* In the case of an award made on the basis of risk-adjusted returns, be in a major asset allocation sub-category, or in one of the other larger sub-categories. Sub-categories that have at least five actively managed funds with histories of five years or more are included in the awards.
* Not be a passive, or an index-tracker, fund.
* Not be a money market fund.
* Not be in a varied specialist sub-category or in the domestic asset allocation targeted absolute and real return sub-category where mandates differ widely.
* Not have changed sub-categories during the past year.
* In the case of offshore funds, have been registered with the Financial Services Board for at least a year.