How your investments fared in the first quarter
WORDS ON WEALTH:
Equity markets continued their upward trajectory during the first quarter 2021 to the end of March. The FTSE/JSE All Share Index was up almost 13% over the three-month period and up 52% for the 12 months to the end of March. Admittedly, the 52% rise was off a low base: the JSE had, in March last year, suffered one of the steepest plunges in its history, from about 58 000 points to about 38 000, a drop of 34%. Nonetheless, after "treading water" around 58 000 for months and even years before the pandemic, the Alsi was at 66 500 at the end of March, a rise of almost 15% from pre-pandemic times.
The surge in the local equity market has largely been driven by the commodity boom: the Resources 10 Index is up 16% for the quarter and 83% over 12 months. This has come mainly thanks to the platinum-group-metal (PGM) miners, who have seen profits soar: Amplats's share price went from about R750 at the end of March last year to R2150 at the end of March this year (up 187%), and Impala Platinum went from R75 to R275 (up 267%). Sibanye, a more diversified miner but with a strong interest in the PGMs, has gone from R22 to R65 (up 150%).
Industrials fared well too, up 12.2% for the quarter and 36% for the 12 months (and up a healthy 20% since before last year's crash).
Financials have experienced a rougher ride, with worries about debt defaults through the pandemic, but they are emerging stronger than expected: up 1.7% for the quarter and 37.1% for the 12 months (but still down 20% from pre-pandemic levels).
For me, a good indicator of the state of the real economy is the performance of the small and medium-cap stocks. These indices are showing welcome growth: the Small Cap Index was up 19.8% for the quarter and up 75% for the 12 months, while the Mid Cap Index was up 8.7% and 42% respectively.
Looking at offshore equity markets, the Dow Jones Industrial Average was up about 9% in US dollars for the quarter and 57% for the 12 months. The S&P Global 1200 Index, a measure of the global equity market, was up 4.8% and 49% respectively, in dollars.
Interest-bearing investments did well over 12 months, but fared poorly over the quarter. Corion Capital's Quarterly Income Report shows a return of -1.7% for bonds over the quarter, but a healthy 17% for the 12 months. Other assets returned as follows: inflation-linked bonds 4.6% and 16.7%; preference shares 2.1% and 30.1%; and cash 0.9% and 3.8%.
Listed property is booming again after a torrid time in 2020. It's up 6.4% for the quarter and 34.4% for the year. Over three years, however, the annualised return is a dismal -12.9%.
The rand, along with other emerging market currencies, has been relatively strong, but volatile as ever. It remained flat over the quarter at around R14.70, though with some ups and downs. Over the 12 months to March 31, however, it strengthened by about 22%, which means that the performance of offshore investments may have been lower than expected in rand terms.
Not surprisingly, resources funds and equity funds with a large holding in resources have provided excellent returns for their investors. According to ProfileData, the five top-performing unit trusts over the 12 months to March 31 were: Sanlam Investment Management Resources Fund (159.87%), Coronation Resources Fund (157.74%), Blue Quadrant Worldwide Flexible Prescient Fund (137.33%), Nedgroup Investments Mining and Resource Fund (133.23%), and Fairtree Equity Prescient Fund (101.47%).
The top three South African unit trust management companies in the PlexCrown rankings are: Ninety One, retaining its top position from the 4th quarter 2020, with 3.941 PlexCrowns; H4 Collective Investments, moving from third into second place, with 3.905 PlexCrowns; and Mi-Plan, which dropped from second to third place, with 3.769 PlexCrowns. The managers’ funds each score a PlexCrown rating according to its risk-adjusted performance, and a weighted average of its qualifying funds determines its overall rating.