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South Africa’s unit trust heroes

The best funds over the last five and ten years.

Klerksdorp – Any investor in equities anywhere in the world should know that stock markets do not move in a linear fashion. There are plenty of ups and downs in any equity investment journey.

Over time, however, equities remain the most effective means to grow capital.

That has been pretty well illustrated over the last ten years. Stock markets have taken some huge knocks over this period, yet a well-constructed equity portfolio would still have been the best place to have one’s money since 2003.

The below analyses of South Africa’s top-performing unit trusts over the last five and ten years bear this out emphatically.

Five years

When we did this analysis last year, 11 of the top 15 unit trusts over the five years to , 31 December 2012 were real estate funds. That has however changed quite dramatically and one year later, not a single one of them appears on the list:

South Africa’s top performing funds to 31 December 2013

Fund

5 year performance (annualised)

TER

Coronation Industrial Fund

28.45%

1.18%

36ONE MET Flexible Fund

26.58%

4.73%

SIM Industrial Fund

26.04%

1.72%

Nedgroup Investments Financials Fund

25.92%

1.88%

Stanlib Industrial Fund

25.19%

1.71%

Centaur MET Flexible Fund

25.04%

3.20%

PSG Equity Fund

24.59%

1.73%

Nedgroup Investments Entrepreneur Fund

24.10%

1.73%

Visio MET Actinio Portfolio

24.04%

6.14%

Foord Equity Fund

23.95%

1.70%

Momentum Industrial Fund

23.44%

1.73%

Old Mutual Industrial Fund

23.31%

1.43%

Investec Emerging Companies Fund

23.03%

1.74%

Coronation Top 20 Fund

22.87%

1.81%

Harvard House MET Equity Fund

22.67%

1.46%

Source: Morningstar

Of the 15 funds listed, 12 are pure equity funds. Five of these are industrial funds, four are general equity funds, two are small cap funds, and one is a financials fund.

The other three – the 36ONE MET Flexible Fund, the Centaur MET Flexible Fund and the Visio MET Actinio Portfolio – are all multi-asset flexible funds. However all three carry a mandate to primarily invest in listed equities, and all of them currently carry equity exposure greater than 85%. It would therefore be fair to classify all 15 funds on this list as equity funds.

The Coronation Industrial Fund, the Stanlib Industrial Fund and the Coronation Top 20 Fund are the only three funds that have retained their position on the list from last year.

However, despite the prominence of the industrial funds on the list, it should be noted that none of them has outperformed the FTSE/JSE Indi 25 Index and by implication the Satrix Indi ETF. That is up 28.64% over the same period.

The PSG Equity Fund’s consistently strong performance since 2009 has seen it take over as the best-performing general equity fund over the last five years. The fund’s ability to hold a significant portion of its portfolio in small and mid cap stocks as well as a well-constructed offshore holding have been key to this performance.

The Nedgroup Financials Fund stands out as the only financials equity fund on this list and has comfortably outperformed the FTSE/JSE Fini 25 Index over this period. It is also a fund that has made good use of its offshore allowance.

Ten years

When we did this analysis last year, only six funds appeared in the top 15 over both five and ten years. Three of those were listed property funds.

This year, there are eight that make it onto both lists, and of course none of them is in the real estate category:

South Africa’s top performing funds to 31 December 2013

Fund

10 year performance (annualised)

TER

SIM Industrial Fund (class R)*

25.32%

1.14%

Coronation Industrial Fund

25.08%

1.18%

Coronation Top 20 Fund

23.60%

1.81%

Stanlib Industrial Fund

23.45%

1.71%

Nedgroup Investments Entrepreneur Fund

22.80%

1.73%

Momentum Small/Mid-cap Fund

22.67%

1.74% 

Prudential Equity Fund

22.62%

2.44%

Prudential Dividend Maximiser Fund

22.48%

2.26%

Coronation Equity Fund (class R)*

22.10%

1.16%

Stanlib Property Income Fund

21.91%

1.49%

Foord Equity Fund

21.77%

1.70%

Old Mutual Industrial Fund

21.76%

1.43%

SIM Value Fund

21.66%

1.63%

Momentum Industrial Fund

21.22%

1.73%

Stanlib Multi-manager Property Fund

21.01%

1.49%

Source: Morningstar

* The SIM Industrial (R) and Coronation Equity (R) funds have been included as the A classes of both funds do not yet have 10 year track records.

What is immediately apparent is that all five industrial funds make it onto both lists. Most impressively, the three best of them are in the top five over both periods. The performance of industrial stocks on the JSE has been one of the biggest stories over the last decade and that has driven the gains in these unit trusts.

Of the other funds, six are general equity funds, two are small cap equity funds and two are real estate funds. In other words, 13 of the 15 are pure equity funds, with the Stanlib Property Income Fund and the Stanlib Multi-manager Property Fund being the only exceptions.

Last year, 12 of the top 15 funds over ten years were pure equity funds, with three real estate funds in the mix. This is a clear indication of the ability of equity funds to deliver superior long-term returns.

Finally, it is worth highlighting those funds that have delivered such consistent performance that they have have kept their place on the list from last year to this. Unlike the top performers over five years, there is a significant carry-over of funds that made it into the top 15 over ten years to both the end of 2012 and 2013. In total, 12 of these funds appear again:

South Africa’s top performing funds over ten years

Fund

Rank at 31 December 2012

Rank at 31 December 2013

Coronation Industrial Fund

5th

2nd

Coronation Top 20 Fund

8th

3rd

Stanlib Industrial Fund

3rd

4th

Nedgroup Investments Entrepreneur Fund

2nd

5th

Momentum Small/Mid-cap Fund

1st

6th

Prudential Equity Fund

11th

7th

Prudential Dividend Maximiser Fund

14th

8th

Stanlib Property Income Fund

4th

10th

Old Mutual Industrial Fund

7th

12th

SIM Value Fund

12th

13th

Momentum Industrial Fund

15th

14th

Stanlib Multi-manager Property Fund

6th

15th

For more, visit Moneyweb’s Click-a-unit trust/ETF tool.

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