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File Image: IOL

Market winners and losers to the end of September

By Martin Hesse Time of article published Oct 25, 2020

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WORDS ON WEALTH:

Looking at some popular global and local market indices for the 12 months to the end of the third quarter, you would never conclude that 2020 has been the most traumatic year for financial markets since the 1929 Wall Street Crash. Other indices, however, reflect the full extent of the pandemic-triggered crisis.

The MSCI World Index, which constitutes about 1 600 stocks of companies throughout the world, was up 19.82% for the year in rand terms and up 10% in United States dollars.

The Nasdaq Composite Index, which represents US tech and industrial stocks, was up 40% in US dollars over the 12 months.

The FTSE/JSE All Share Index was – surprise, surprise – up 2.01%. Not exactly shooting the lights out, but not negative, as you may have expected. And the FTSE/JSE Industrial Index, which measures performance of the local industrial sector, managed 4.31%.

The best-performing companies on the JSE were the miners: the FTSE/JSE Resources 10 Index was up 27.40%, much of that, no doubt, on the back of a weaker rand, which, in the period under review, dropped more than 9% against the US dollar.

But now, ouch – the sectors that have suffered.

The FTSE/JSE Mid Cap Index, representing smaller and mid-size companies, and a fair reflection of our stumbling economy, was down 14.96% at the end of September.

The FTSE/JSE Financial Index, which tracks the share prices of banks, insurers and other financial services companies, was a negative 30.91%.

Worst of all was the listed property sector, which was in the doldrums before Covid delivered a knock-out blow: the FTSE/JSE SA Listed Property Index was down 46.07% for the year.

Unit trust performance

Unit trust funds that performed well for the year to the end of September were those invested in global equity markets, and the big tech stocks in particular, and, locally, those invested in mining companies.

According to data supplied by ProfileData, the five top-performing locally domiciled unit trust funds were: IP Global Momentum Equity Fund (94.00%). Naviga BCI Worldwide Flexible Fund (90.09%), Old Mutual Gold Fund (88.66%), Anchor BCI Global Equity Feeder Fund (81.25%) and Sygnia FAANG Plus Equity Fund (74.06%).

Returns from the large and popular South African General Equity subcategory, comprising 169 funds, ranged from 20.65% to -30.64%, with an average of -3.5%. Only 44 funds (about a quarter) equaled or outperformed the Alsi.

Looking at the equally popular South African Multi-Asset High Equity subcategory, housing 189 "balanced" funds, one-year returns ranged from 24.44% to -21.81%, with an average of a meagre 1.93%. These are funds that can invest up to 75% in equities but that can switch into safer assets if conditions demand it.

Funds invested in cash and short-term instruments were characteristically stable: money market funds averaged 6.46%, with little deviation, and short-term interest-bearing funds delivered 6.62%, on average. However, variable-term interest bearing funds, holding longer-term bonds, averaged only 1.95%, with high deviation from the mean: the top-performer returned 9.06% and the worst performer -9.75%.

Against all these figures, year-on-year Consumer Price Index inflation to the end of August was 3.1%.

PlexCrown ratings

The PlexCrown rating system rates unit trust funds according to risk-adjusted returns over periods up to five years. Funds receive from one to five PlexCrowns, with five PlexCrowns representing the best risk-adjusted performance within a fund subcategory. Unit trust managers are accorded an overall PlexCrown rating based on the individual ratings of their funds.

The top five domestic managers at the end of September were: Ninety One (4.295 PlexCrowns), Mi-Plan (4.012 PlexCrowns), H4 Collective Investments. (3.576 PlexCrowns), Coronation (3.505 PlexCrowns), and Alexander Forbes (3.418 PlexCrowns).

The top three offshore managers were T Rowe Price (4.225 PlexCrowns), Marriott (4.000 PlexCrowns) and Foord (3.500 PlexCrowns).

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