The markets were choppy over the past quarter, but the three domestic asset management companies that came out on top in the Raging Bull Awards in February, based on their risk-adjusted performance to the end of last year, held on to their positions to March 31. They are Allan Gray in first place, followed by PSG, followed by Coronation Fund Managers.
The PlexCrown Fund Ratings, on which these quarterly assessments and the Raging Bull Awards are based, do not merely rate a fund on its return; they take into account consistency of performance and the risk profile or volatility of the fund. In other words, funds rated under this system are less likely to have achieved their rating through being lucky in their choice of investments, but through the consistent application of a tried-and-tested investment approach or strategy.
First, a quick look at how the markets performed in the quarter to March 31.
Both the FTSE/JSE All Share Index (a measure of the local stock market) and the MSCI World Index (a measure of the global market) were down about 6% for the quarter in rand terms.
In the domestic collective investment sub-categories, which reflect the different market sectors (see graphs), listed property funds performed the worst over the quarter, at –17.01%. One of the worst-performing funds in this sub-category was the highly regarded Absa Property Equity Fund – down 34.5% for the quarter and down 19.48% for the 12 months to March 31, according to ProfileData. Until recently, listed property was one of the best-performing sectors on the JSE.
The best performers were the bond funds. The FTSE/JSE All Bond Index was up 8.1% for the quarter and the average return in the South Africa interest-bearing variable-term sub-category was 6.31%.
Over the three- and five-year periods, which are of more concern to long-term investors, the picture differs somewhat.
Over three years, the best-performing sub-categories in the local market were the interest-bearing (bond and money-market) funds, delivering about 7% a year, on average, but over five years the equity funds were still at the fore, with South African equity financial funds returning 11.29% and general equity funds 7.77%, according to ProfileData.
TOP DOMESTIC MANAGERS
Allan Gray retained its position as South Africa’s top manager, according to the PlexCrown ratings, with an average of 4.745 PlexCrowns. It had eight qualifying funds, of which only two (its Bond Fund and Optimal Fund) were awarded fewer than five PlexCrowns, the highest rating. Those with five PlexCrowns were: the three Allan Gray-Orbis global funds (Global Equity Feeder, Global Fund of Funds and Global Optimal Fund of Funds), the manager’s Equity Fund, Balanced Fund and Stable Fund.
PSG, in second place, had seven qualifying funds, of which five achieved five PlexCrowns (the PSG Equity Fund, Diversified Income Fund, Balanced Fund, Flexible Fund and Stable Fund). It achieved an average of 4.491 PlexCrowns.
Third-placed Coronation, perhaps at a disadvantage because of the much larger range of funds in its stable, achieved an average of 3.789 PlexCrowns for its 18 qualifying funds. Two of the 18 funds were awarded five PlexCrowns (Coronation’s Resources Fund and its Bond Fund), although bringing up the average were its 10 funds that received four PlexCrowns.
Of the asset managers with offshore operations that offer funds approved by the Financial Sector Conduct Authority to be marketed to South Africans (and which are denominated in foreign currencies), Investec Asset Management came top, with an average rating of 4.500 PlexCrowns for its seven qualifying funds.
Orbis, Alan Gray’s offshore arm, made a remarkable leap from sixth place at the end of last year to second place, with 3.917 PlexCrowns. Sharing third place, at 3.750 PlexCrowns, were Nedgroup Investments and Momentum.