Cape Town-based asset manager Allan Gray has retained its position as South Africa’s best-performing unit trust management company. At the glittering 22nd Raging Bulls Awards gala dinner at The Avenue conference centre at the V&A Waterfront on January 31, Allan Gray walked off with the Raging Bull Award for the South African Management Company of the Year for the second year in a row.
Allan Gray has won the award six times in the 10 years since it has been eligible for the company award, equalling the record of its Mother City rival, Coronation Fund Managers.
The runners-up for the management company award were PSG Asset Management in second place and Coronation Fund Managers in third place.
Winning the Raging Bull Award for Offshore Management Company of the Year were, tied in first place, Investec and Nedgroup Investments. And a new award was presented for the first time, the Chairman’s Raging Bull Award for the Best Black-owned Management Company.
The Raging Bull Awards, hosted each year by Personal Finance, ProfileData and PlexCrown Ratings, recognises outstanding performance by unit trust fund managers. Actively managed funds are judged on straight performance over three years and on risk-adjusted performance over five years.
Management companies are judged on the risk-adjusted performance of their qualifying funds over five years – in this case to the end of 2017.
Risk-adjusted performance for the Raging Bull Awards is measured using the PlexCrown Ratings system (see below).
Interviewed by Personal Finance after the event, Allan Gray’s chief operating officer designate, Rob Formby, said it is always an honour to receive such an award, and, although awards generally shouldn’t determine how investors choose a management company, the award reaffirms the benefits of Allan Gray’s investment philosophy.
Allan Gray prides itself, Formby says, on its consistency of approach and long-term value creation.
“We look for under-valued companies and we buy into those, and when they reach fair value we sell them. This sounds quite simple, but the trick is in how you implement it. Applying the same philosophy over more than 40 years through different market cycles has led to the returns and wealth creation for investors.
“What distinguishes us is this consistency of approach. When things are tough it’s easy to move away from that, and it’s less easy to be resolute, and I think that’s generally what we’ve got right,” Formby says.
Top three SA managers
1. Allan Gray. To the end of December 2017, seven of Allan Gray’s eight qualifying funds scored five PlexCrowns. These were three rand-denominated global and worldwide funds (the Allan Gray-Orbis Global Equity Feeder Fund, Global Fund of Funds, and Global Optimal Fund of Funds); the Allan Gray Equity Fund; Allan Gray Bond Fund; and two multi-asset funds (its Balanced Fund and Stable Fund). Its Optimal Fund, a more conservative multi-asset fund, scored three PlexCrowns. Taking into account different weightings of fund categories, Allan Gray achieved an overall rating of 4.994 PlexCrowns
2. PSG. PSG had seven qualifying funds, of which five scored five PlexCrowns. These were the PSG Equity Fund, PSG Diversified Income Fund, and three multi-asset funds (PSG Balanced Fund, Flexible Fund and Stable Fund).The two remaining funds, the PSG Global Equity Feeder Fund and PSG Income Fund, scored three PlexCrowns. The manager’s overall rating was 4.658 PlexCrowns.
3. Coronation. Coronation had 19 qualifying funds. Two achieved the top rating of five PlexCrowns (the Industrial Fund and Resources Fund), while four achieved an above-average four PlexCrowns (the Optimum Growth Fund, Equity Fund, Smaller Companies Fund, Top 20 Fund, Bond Fund, Jibar Plus Fund, Strategic Income Fund and Balanced Plus Fund).The remaining funds scored three and two PlexCrowns. Coronation’s overall rating was 3.694 PlexCrowns.
HOW THE PLEXCROWN SYSTEM RATES FUNDS
The PlexCrown Fund Ratings, which form the basis of the Raging Bull Awards, are in line with guidelines set by the Association for Savings & Investment South Africa and criteria set by PlexCrown Fund Ratings. They are as follows:
• Unclassified funds are not rated.
• Gold and precious metal funds are excluded.
• A sub-category is rated only if it consists of at least five funds.
• Only funds with a performance history of at least five years can qualify for a rating.
• Pure index-tracking funds are excluded.
• Funds in the South African equity general and large-cap sub-categories that track indices where investment methodologies are involved are rated with other funds in their sub-category.
• Funds in the South African interest-bearing money market sub-category are excluded.
• The Financial Services Board-approved global asset allocation prudential and flexible sub-categories are rated in the broader global asset allocation category.
• Where a fund has more than one class, the returns of the higher-cost A-class fund are used.
• Funds in non-multi-asset and interest-bearing variable-term sub-categories are ranked on a percentile basis over five- and three-year periods according to the Sharpe Ratio, Alpha, Treynor Ratio, Sortino Ratio and Omega.
• Funds in the multi-asset sub-categories (excluding multi-asset income) are ranked over five- and three-year periods according to the Sharpe Ratio, Alpha, Sortino Ratio and Omega.
• Funds in the multi-asset income and interest-bearing short-term sub-categories are ranked over five- and three-year periods according to the Sharpe Ratio, Alpha and Sortino Ratio.
• The funds’ percentile rankings per measure over three years and five years are time-weighted by applying weights of 40% and 60%. The total percentile ranking of funds in the non-multi-asset and interest-bearing variable-term sub-categories are then calculated by applying a weight of 20% to each fund’s percentile rankings per measure.
• In the multi-asset sub-categories (excluding multi-asset income), a weighting of 25% is given to the four performance measures: the Sharpe Ratio, the Sortino Ratio, Alpha and Omega.
• In the multi-asset income and interest-bearing short-term sub-categories, a weighting of 33.33% is given to the three performance measures: the Sharpe Ratio, the Sortino Ratio and Alpha.
• The fund with the highest weighted percentile ranking is therefore the winner in its sub-category.