Last week I looked at collective investment performance over the last quarter and 12 months. Today I dig down into long-term returns, over 20 and 10 years, to the end of September. After all, this is why we invest: to benefit from compounding over long periods. All return data was supplied by ProfileData.
First, we need to consider inflation, because, if you haven’t beaten that, your savings have eroded over time. Over 20 years, Consumer Price Index inflation has averaged 5.1%, according to the Inflation tool website. Over 10 years it has averaged 5.4%. To calculate an after-inflation (real) return you need to subtract the inflation figure from the annualised return.
I have restricted the survey to funds that are high in growth assets (equities and listed property), because these are recommended by investment experts to beat inflation over the long term.
Only a handful of the 1 500-or-so retail funds in existence today were around 20 years ago. Others that existed then may have merged with current ones. We look only at funds that have remained intact over the period, though their investment mandates may have changed.
• SA equity funds: The 28 funds in the SA Equity General category that are 20 years or older had an average annualised return of 13.7%, about 0.8% below the JSE All Share Total Return Index (Alsi), which delivered 14.52%. The top-performing fund beat the index handsomely – the Coronation Top 20 Fund returned 16.32%. Top funds in the JSE’s financials, industrials and resources sectors were the Nedgroup Investments Financials Fund (15.81%), Satrix Capped Indi ETF (17.25%) and Coronation Resources Fund (16.57%).
• SA multi-asset funds: There are only 14 funds in the high-equity (balanced fund) category that have been around for 20 years or more. These funds averaged 11.94%, which is about 6.5% above inflation. The top-performing fund was the Ninety One Opportunity Fund, previously the Investec Opportunity Fund (13.46%). In the flexible category (four funds, which averaged 11.50%), the top performer was the PSG Flexible Fund (13.68%).
• SA listed property funds: There are only four real estate funds of 20 years or older. Over this period they averaged 10.00% a year. The top fund was the Old Mutual SA Quoted Property Fund (11.76%).
• Worldwide and offshore feeder funds: The MSCI World Index delivered an annualised 11.19% over 20 years in rand terms, a substantial 2.5% lower than the Alsi. The top performing fund in the popular Global Equity General category (12 funds) was the Old Mutual Global Equity Fund (14.28%). The top fund in the Worldwide Multi Asset Flexible category (seven funds) was the Coronation Market Plus Fund (14.07%).
• SA equity funds: The 75 funds in the SA Equity General category averaged 6.74% a year, almost 2% lower than the Alsi (8.64%), providing a real return of only about 1.3%. The top performer was the Fairtree Equity Prescient Fund, which returned 12.01%. The best funds in the three main equity sectors were the Nedgroup Investments Financials Fund (9.53%), Satrix Capped Indi ETF (8.32%) and Coronation Resources Fund (15.75%).
• SA multi-asset funds: The 72 funds in the high-equity category averaged 6.93% over the 10 years, about 0.2% above the pure equity funds. The best performer was the Centaur BCI Balanced Fund (9.96%). In the flexible category (21 funds averaging 7.52%), the top fund was the Centaur BCI Flexible Fund (11.32%).
• SA listed property funds: 19 funds managed an average annualised return of just 1.35%, meaning that inflation eroded capital by about 4% a year. The top performer, the Absa Property Equity Fund, returned 5.50%.
• Worldwide and offshore feeder funds: The MSCI World Index returned an annualised 13.11% in rand terms over the 10 years to September. The 27 Global Equity General funds averaged 12.11%. Top among these was again the Old Mutual Global Equity Fund (15.45%). The 32 funds in the Worldwide Multi Asset Flexible category averaged 8.88%; however the top performer, the Blue Quadrant Worldwide Flexible Prescient Fund, returned 19.84%, over 7% more than the second-best fund. Top performers in other offshore categories were the Mi-Plan IP Global Macro Fund (14.99%) and Sygnia Itrix MSCI US Index ETF (17.91%).
• The best performing fund over 20 years was an index tracker, the Satrix Capped Indi ETF, which delivered an annualised 17.25% a year. This fund, which was launched in February 2002, invests in the shares in the JSE Capped Industrial 25 Index, which caps the allocation of individual shares at 30%.
• The best performing fund over 10 years was the Blue Quadrant Worldwide Flexible Prescient Fund (19.84% a year), launched in August 2013. In June, the fund’s top holdings were oil and energy stocks.
• Over 20 years, the JSE dominated performance, especially in the industrials and resources sectors. Over 10 years, offshore funds soared while the JSE floundered, only just beating inflation.
• Listed property has performed miserably over 10 and 20 years, due largely to a slump from about 2018 onwards, exacerbated by the Covid-19 pandemic.
• Newer, smaller “boutique” managers have stolen the limelight from the bigger, established managers, on the whole.
Note: this article is retrospective and does not indicate future performance.
* Hesse is the former editor of Personal Finance