Martin Hesse. File Image: IOL
OH DEAR. Last year was not kind to investors. It was the worst year for the JSE since the Big Crash in 2008. And it started off so well, with all the optimism around our new president.

I won’t go into the reasons for the malaise, which differ according to the analyst you speak to. But let’s look more closely at the figures, which make for enlightening, although somewhat depressing, reading.

The FTSE/JSE All Share Index ended 2017 at 59504 points (after breaking the 60000 mark in November 2017). It ended 2018 at 52736 points, a drop of 11.4%. That’s low compared with the 27.5% drop in 2008, but here’s the rub: there hasn’t been a crash. Just lots of volatility, with most of it occurring in the last quarter.

Looking at the total return index (which measures share prices with dividends reinvested), the drop was a slightly more palatable 8.5%. This is the better indicator when considering the performance of your equity unit trust or exchange traded fund investments, because, unless you’re drawing an income, you’re likely to be reinvesting your dividends.

So how did our equity fund managers do in the tough times that were 2018?

Not too well, sadly. The average South African general equity unit trust fund was down 8.9%, according to ProfileData. Of the 163 funds in this sub-category, only two did not end in the red after costs: the Kagiso Islamic Equity Fund (up 1.7%) and the RECM Equity Fund (up 0.47%). The worst-performing funds were down as much as 20%.

It’s likely that the better-performing funds had a substantial exposure to our resources sector, the only sector to have done well in 2018. The worse-performing funds were most likely heavily invested in industrials, which had a miserable year. The darling of these stocks, Naspers, which featured large in many an equity portfolio, lost 16.5% of its value in 2018.

High-equity multi-asset funds also did poorly. These funds can have a maximum of 75% in equities, but the managers can reduce their equity exposure if the markets are looking dicey, switching to safer options such as bonds and cash. Of the 174 registered high-equity multi-asset funds, only a handful emerged in the black at the end of the year.

The average fund in this sub-category was down 3.7%, according to ProfileData. Star performers were the Gryphon Prudential Fund of Funds (up 5.4%) and the Olympiad BCI Managed Fund of Funds (up 5.24%).

Cash and short-term bonds were the best-performing local asset classes, delivering northwards of 7%.

Global market

The JSE was in good company on its downward slide. The Visual Capitalist website, which contains informative financial infographics, recently published a infographic titled “How every asset class, currency and sector performed in 2018”. It shows that most asset classes ended 2018 in the red, with the S&P 500 (which measures the 500 top American stocks) down 6.2%, emerging markets down 16.9%, and non-US developed market stocks down 14.5% (all in dollar terms which, it must be said, strengthened against world currencies by 4.6% in 2018).