A better year for active managers

The latest Spiva scorecard shows that nearly half of local equity managers outperformed a broad market benchmark over the 12 months to June.
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For the year to the end of June 2021, 44.4% of South African equity managers outperformed the S&P South Africa Domestic Shareholder Weighted (DSW) Capped index according to the latest S&P Indices Versus Active (Spiva) study. On a risk-adjusted basis, these managers fared even better, with 57% beating the index.

While only 38.2% of managers outperformed the large-cap S&P South Africa 50 on a total return basis over this period, 65.2% beat this index on a risk-adjusted calculation.

The risk-adjusted return takes the annualised average monthly return of funds, divided by the standard deviation of their monthly returns.

This was a positive performance for active managers over a period when the South African market was much broader than it has been in recent years. This is clear from the longer-term performance of active managers relative to the S&P South Africa 50.

Over five years, just 7.3% of managers outperformed the large-cap index. That percentage stays the same on a risk-adjusted basis.

South African managers running global equity funds also had a stronger year, with 34% of them outperforming the S&P Global 1200 index. On a risk-adjusted basis, just over 50% outperformed.

Longer term, however, only 10.6% outperformed the S&P Global 1200 over five years. Their performance was even weaker on a risk-adjusted basis, with just 8.5% outperforming.

Average returns

Notably, the average performance of local equity funds on an asset-weighted basis was ahead of the broad market index over all time periods. This reflects the relative strength of the larger funds in the local equity category.

Compared with the large-cap S&P South Africa 50, however, the average asset-weighted performance of South African equity funds was significantly lower than the index over five years, despite outperformance over one year.

The same was true for global equity funds run by local managers.

Patrick Cairns is South Africa Editor at Citywire, which provides insight and information for professional investors globally.

This article was first published on Citywire South Africa here, and republished with permission.


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Most active managers are index huggers. They just do what everyone else is doing. If it’s wrong, well, everyone is wrong together. They then charge clients, exorbitant fees for the privilege.

I agree it was a strong year for active managers according to the article because 44% of mangers beat the S&P index. However, the writer could equally have written that it was a poor year for active managers because the majority of them 56% under performed the S&P index. If the majority of fund managers under perform the index can it really be a strong year for them or if it is really a strong year for them they must really be very poor in a weak year.

Don’t worry there are enough strong active managers that outperform the index (after fees) to make it unnecessary to blindly buy index funds.

For sure the losers make up the majority but that is a different problem.

They are gonna need one hell of a year to catch up if you look at the five year numbers 92,78% of them underperformed the S&P SA 50.

Oh and dont forget they are going to take a performance fee if they do have a good year leaving you as the investor with a very average year.

Thanks i will stick with my passives for now.

57% beat the index meaning 43% didn’t. Not too flash but did this 57% include fees? Include them and maybe less than 50% would beat the index. Show me the customer’s yachts indeed!

Indeed. To me the only real measure would be how much cash leaves my bank account for an investment, and how much cash could have potentially been added to my bank account exactly one year later had the investment been cashed in. But methinks financial institutions will NEVER agree to allow investors to compare apples with apples would they? Or maybe I’ve missed something?

How many street kids that Julius Malema feeds with his Parliamentary Salary of R1 million?

End of comments.




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