PSG has emerged as the top South African unit trust management company to the end of March, according to the PlexCrown survey of unit trust managers, with Allan Gray in second place and Coronation Fund Managers in third. In a similar survey by United States ratings company Morningstar, the top three are Allan Gray, Prudential and Prescient. (See tables here.)
The PlexCrown survey is conducted quarterly and is used to determine the winner of the Raging Bull Awards each year. It rates unit trust funds according to their risk-adjusted returns over periods of three or five years on a one-to-five PlexCrown scale, with one PlexCrown the lowest score, five the highest, and three representing the average.
Each management company is rated according to the weighted scores of its qualifying funds. Funds must have been in existence for at least five years, and certain types of funds, such as money-market funds, are not rated. Some companies, such as Foord and Truffle, do not feature in the ratings, because they do not offer funds in all four required market sectors, which are: global and worldwide, South African equity and real estate, South African interest-bearing and income, and South African multi-asset.
To the end of March, PSG dislodged Allan Gray from top place, with 4.504 PlexCrowns (4.276 at the end of December 2016) against Allan Gray’s 4.389 (4.393 at the end of last year). Out of PSG’s seven funds to be rated, five of them achieved five PlexCrowns. They are PSG’s Equity Fund, its Diversified Income Fund, and its three multi-asset funds: the Balanced Fund, Flexible Fund, and Stable Fund. Two remaining funds, the Income Fund and Global Equity Feeder Fund, earned three and two PlexCrowns respectively.
Allan Gray had eight funds rated in the survey. Three earned five PlexCrowns: the Allan Gray-Orbis Global Equity Feeder Fund, Allan Gray-Orbis Global Fund of Funds, and the Allan Gray Balanced Fund. Four funds earned four PlexCrowns (Equity Fund, Bond Fund, Optimal Fund and Stable Fund), and one, the Allan Gray-Orbis Global Optimal Fund of Funds, earned two PlexCrowns.
The manager to come third, Coronation, has 19 qualifying funds. Four achieved five PlexCrowns: the Coronation Industrial Fund, and all three of its funds in the South African interest bearing and income category – the Bond Fund, Jibar Plus Fund and Strategic Income Fund. Coronation funds earning the second-best score of four PlexCrowns were the Global Managed [ZAR] Feeder Fund, Optimum Growth Fund, Equity Fund, Financial Fund, Resources Fund, Balanced Defensive Fund and Balanced Plus Fund.
South African-based Nedgroup Investments takes first place among PlexCrown's survey of offshore managers, nudging British investment company ACPI from its place on the rostrum. In second place was global asset manager PineBridge, and in a three-way tie for third place were Investec, Oasis and Schroder.
Offshore managers operate outside South Africa’s borders (although their head offices may be here). Their funds are denominated in currencies other than the rand, and they are licensed by the Financial Services Board to be marketed to South African investors.
Nedgroup Investments, with an overall score of 4.500 PlexCrowns, has three offshore funds that qualify for the PlexCrown ratings. Two of these, its Global Cautious Fund and Global Flexible Fund, each received five PlexCrowns, and the third, its Global Equity Fund, received four.
PineBridge Investments achieved an overall score of 3.875 PlexCrowns, with three of its five qualifying funds (the Asia ex Japan Small Cap Equity Fund, Global Focus Equity Fund and US Large Cap Research Enhanced Fund) receiving five PlexCrowns.
The quarterly Morningstar Rating Analysis of South African asset managers also works on a system of one to five (stars, in this case, again with one the lowest score and five the highest), but the criteria on which managers are included and how each manager is assessed differ somewhat to the PlexCrown ratings.
Like PlexCrown, Morningstar rates individual funds based on a measure that takes both return and risk into account. The funds are rated over periods of three, five and 10 years, weighted in favour of the longer periods.
The managers must have assets under management of at least R5 billion. Their funds are divided into three categories: equity, asset allocation (multi-asset funds) and fixed income (bonds and debt instruments). Each fund in the manager’s product range is rated, and these are aggregated to give a manager’s overall rating. Some categories of funds, such as alternative funds, money market funds and commodity funds, are excluded.
Morningstar produces two ratings of managers: an asset-weighted rating, which takes into account assets under management in each fund, and an equal-weighted rating, in which all funds are treated equally and the rating is a simple average of their scores. “Each has it merits,” Morningstar says.
“The equal-weighted rating mirrors the average quality of the overall fund range. The asset-weighted rating gives an assessment of an asset manager’s weaknesses and strengths, in light of how investors allocated assets between available investment options within the fund range.”
Allan Gray came out tops in both rankings (see table), and Prudential is in second place in both. The rankings differ further down: in the asset-weighted ranking Prescient is third, and in the equal-rated ranking the third-place honour goes to Nedgroup Investment Managers.
Allan Gray retained its top position in both rankings from the previous survey, conducted at the end of December 2016.