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Disappointing returns for unit trust investors in second quarter

By Martin Hesse Time of article published Jul 24, 2019

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The share market for South African unit trust investors largely continued to disappoint over the second quarter of the year. The FTSE/JSE All Share Index (Alsi) started the quarter at about 58000, climbed a little to touch 60000 highs, then dropped at the end of April to bottom out at just more than 54000 in May. It subsequently climbed back up to hover around the 58000 mark again.

Over six months, the market’s performance appears reasonably robust, but this is because it was climbing out of the trough it hit last October, when it went below 52000. In fact, while there has been a great deal of volatility, the JSE hasn’t gone anywhere over the past 18 months, since it first breached the 60000 mark in November 2017.

According to ProfileData, the Alsi delivered 3.92% for the quarter and 4.42% for the year to June 30.

Looking at the US market, the S&P500 (which tracks the top 500 companies in the US) hit a dip in January, but since then its climb has been relatively strong and steady, and it is currently at record levels of more than 3000.

The rand hovered between R14 and R15 to the dollar throughout the second quarter, as it did over much of the 12 months to June 30.

Among the best-performing local-market unit trusts over the quarter were those in the financials and large-cap sub-categories. But a truer reflection of performance is the 12-month period, over which the best-performing funds were those investing in resources. Gold, in particular, has outperformed, with the Old Mutual Gold Fund delivering 24.15% for the quarter and 64.69% for the 12 months to June 30, according to ProfileData.

Over three years to the end of June, the best-performing funds were also resources funds, with the Coronation Resources Fund delivering an average of 22.2% a year.

Over five years to June 30, unit trusts investing in global equities outpaced those investing in the JSE. The global general equity sub-category delivered 9.7% a year in rand terms, on average, over that period, compared with 3.5% a year from the South African equity general sub-category, according to ProfileData.

Popular balanced funds, which are high-equity multi-asset portfolios, continue to perform dismally: on average they delivered 1.08% over the second quarter, 3.21% over a year, 3.88% a year over three years and 5.05% a year over five years.

All these figures must be measured against inflation, which is at about 4.5%, year-on-year, and which has averaged just more than 5% a year over five years to the end of June.


The PlexCrown Ratings system rates actively managed unit trust funds on risk-adjusted performance over five years, taking into account consistency of performance and the amount of risk a manager takes in achieving that performance. Funds are rated in comparison with other funds in their sub-categories, with five PlexCrowns going to the best performers, one PlexCrown going to the worst performers, and three PlexCrowns being the average.

Prescient shot from 8th place to lead the pack of South African asset managers in the PlexCrown ratings. Of its 11 qualifying funds, three (Prescient Equity Quant Fund, Prescient Income Provider Fund and Prescient Balanced Fund) achieved five PlexCrowns at the end of the second quarter. Its average rating was 4.069.

Investec was in second place in the ratings, with an average rating of 3.818. It has 15 qualifying funds, and four of these achieved five PlexCrowns: the Investec Global Franchise Feeder Fund, the Investec Global Strategic Managed Feeder Fund, the Investec Equity Fund, and the Invested Managed Fund.

In third place was Allan Gray, with an average score of 3.777 PlexCrowns. The Cape-Town-based asset manager had eight qualifying funds, and one of these, the Allan Gray Bond Fund, achieved five PlexCrowns at the end of the second quarter.

Among offshore management companies that are permitted by the Financial Sector Conduct Authority to market their funds in South Africa and which meet the qualification criteria, the top three in the PlexCrown Ratings were: Nedgroup Investments (4.5 PlexCrowns), Investec (3.925 PlexCrowns), and Schroders (3.833 PlexCrowns).

Martin Hesse is the editor of Personal Finance.


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