The three South African management companies that have dominated the top three positions in the rankings of managers for many years were honoured again at this week’s Raging Bull Awards ceremony in Cape Town.
But in a major coup for Nedgroup Investments, which had not managed to earn the Raging Bull Award for the South African Management Company of the Year, it won both this coveted award and the Raging Bull for Offshore Management Company of the Year.
The annual awards are hosted by Personal Finance, a publication of Independent Media, and are co-sponsored by ProfileData and PlexCrown Fund Ratings.
This week’s award ceremony honoured unit trust companies and funds for top performance over periods to the end of last year.
Nedgroup Investments outsources the management of its funds to smaller managers and boutique asset managers that it considers to be “best of breed”.
Three of its rand-denominated funds were recognised for top performance at the awards. Its Financials Fund received the certificate for top performance over three years in the South African equity financial sub-category, and its rand-denominated Global Cautious Feeder Fund received the certificate for top performance over three years in the global multi-asset low-equity sub-category. The Stable Fund received a certificate for risk-adjusted performance over five years by a South African multi-asset low-equity fund.
Among Nedgroup Investments’s offshore (foreign-currency-denominated) funds, the Global Flexible Fund, managed by First Pacific Advisors in the United States, won the Raging Bull Award for the top-performing offshore global asset allocation fund on a risk-adjusted basis over five years.
Its Global Equity Fund received the certificate for the top risk-adjusted performance by an offshore global equity general fund over five years.
Although these four funds were the best in their sub-categories, Nedgroup Investments won the management company awards because of good performance by both its South African funds and its offshore funds.
The Management Company of the Year Award is made on the basis of the average PlexCrown ratings that a unit trust company achieves for the management of all its funds.
The PlexCrown Fund Ratings combine in a single rating up to five different measures of risk-adjusted performance.
Ryk de Klerk, an executive director of PlexCrown Fund Ratings, says Nedgroup has 18 funds that qualify for PlexCrown ratings. Of these, five funds obtained the highest rating of five PlexCrowns, while six obtained the second-highest rating of four PlexCrowns.
An analysis of the changes in the ratings shows that only one of Nedgroup Investments’s funds improved its rating by one PlexCrown, whereas the ratings of four funds dropped by one PlexCrown.
Nedgroup has three offshore funds, two of which, its global equity fund and its global asset allocation fund, each achieved five PlexCrowns. Its global asset allocation flexible fund achieved four PlexCrowns.
Coronation Fund Managers, which won the South African Management Company of the Year Award at last year’s ceremony for the sixth time – and the third time in a row – was in second place in the South African management company rankings for its performance over the year to the end of December 2015.
Coronation this year collected only two certificates, for top risk-adjusted performance over five years by its Jibar Plus Fund in the South African interest-bearing short-term sub-category, and for top risk-adjusted performance over five years by its Global Managed [ZAR] Feeder Fund in the global multi-asset high-equity sub-category.
De Klerk’s survey of management companies shows, however, that Coronation’s longer-term performance is still consistently good, which is why it achieved second place in the domestic management company rankings.
Coronation has 19 funds that qualify for PlexCrown ratings. Of these, four achieved a rating of five PlexCrowns and six received a rating of four PlexCrowns.
Four of Coronation’s funds fell in the ratings by one PlexCrown, while two funds moved up one place.
Allan Gray, a previous multiple winner of the Raging Bull Award for the Management Company of the Year, was placed third in the management company rankings.
None of Allan Gray’s funds achieved the highest PlexCrown rating for performance to the end of last year. Three of its eight rated funds achieved the second-highest rating of four PlexCrowns.
Two of Allan Gray’s funds improved their ratings, while the rating of its bond fund fell.
Special awards
To commemorate the 20th anniversary of the awards, two special Raging Bulls were awarded. Investec Asset Management claimed both awards. Its Equity Fund received the special Raging Bull for top outright performance over 20 years by a domestic equity fund, while the Investec Managed Fund took the special award for the best risk-adjusted performance over 20 years by a multi-asset fund.
Boutiques shine
A number of boutique managers received Raging Bull Awards.
Mazi Capital and its star manager, Malungelo Zilimbola, took the award for its Prime Equity Fund, the best South African equity general fund on a risk-adjusted basis over five years. It was the Prime Equity Fund’s second Raging Bull Award: it won last year for straight performance over three years.
36One claimed the award for the best South African equity general fund for straight performance over three years by its MET Equity Fund.
36One has previously won Raging Bull Awards for its South African multi-asset flexible fund.
Two boutique managers claimed the Raging Bull Awards for risk-adjusted performance by multi-asset funds. Bateleur Capital took the honours for its Flexible Prescient Fund as the top-performing South African flexible fund over five years, while previous Raging Bull Award winner Rezco claimed the award for the top-performing multi-asset equity (previously prudential) fund for its Managed Plus Fund.
Old Mutual’s Global Equity Fund received the Raging Bull Award for the top-performing rand-denominated global equity fund for the fourth time in row.
Prescient’s Income Provider Fund took the honours for the best South African interest-bearing fund, the top performer of the multi-asset income and the interest-bearing short-term and variable-term funds.
Apart from the 12 Raging Bull Awards, 42 certificates were presented to funds that achieved outstanding returns over either three years (straight performance) or five years (risk-adjusted performance) to the end of December 2015.
‘BEST-OF-BREED’ MANAGER SELECTION PAYS OFF, SAYS NEDGROUP
Winning the Raging Bull Awards for the top domestic and offshore management company of 2015 is confirmation that what Nedgroup Investments looks for in its managers pays off in performance for investors, Nic Andrew, the head of the unit trust company, says.
Nedgroup Investments outsources the management of its unit trust funds to the managers it identifies as the best-of-breed. This approach has given many investors access to top boutique managers whose high minimum investment amounts would otherwise make their funds inaccessible to ordinary investors.
Andrew says Nedgroup Investments looks for fund managers who own their own businesses, because as such they have demonstrated their confidence in their ability to manage money and not to go out of business.
Most of the managers have 10 to 20 years’ experience of managing investors’ money.
Nedgroup also looks for managers that are good stewards of capital, Andrew says. They should do more to manage money than to market themselves, he says.
The chosen managers typically focus on downside protection and risk management, and most are focused on valuations (the price of a share or other security relative to a company’s earnings or profits), he says.
Andrew says Nedgroup Investments’s out-performance of its peers and benchmarks has been achieved mostly in tough markets, such as that experienced last year.
He says Nedgroup Investments’s best-of-breed managers may struggle to keep up with the top performers in a bull market, but Nedgroup prefers to choose managers that will perform across up-and-down market cycles.
It also acknowledges that its managers may under-perform at times in order to achieve long-term out-performance.
Andrew says Nedgroup first chose a best-of-breed manager for its rand-denominated funds in 2003, and started choosing best-of-breed managers for its foreign-currency-denominated funds in 2010.
It has the freedom to choose managers from around the world to run its offshore funds, and this has given it the edge over its competitors, which also manage foreign funds approved by the Financial Services Board for South African investors.