What R100k in SA’s biggest equity funds five years ago is worth today

Contrasting total returns shows some eye-opening results …
With a stagnant economy and a weakening currency over time, investors ought to be carefully considering their options. Image: Shutterstock

Imagine for a second that you had invested a lump sum of R100 000 in one of the country’s largest equity funds in November 2016. Perhaps your financial advisor suggested one of the well-known names (no one ever got fired for buying IBM)? Or maybe you were persuaded by one of those tug-on-the-heartstrings TV ads?

What would that R100 000 be worth today?

In this exercise, Moneyweb compared only equity unit trusts with R10 billion or more in assets under management as per Association for Savings and Investment South Africa (Asisa) data to end of June 2021. Importantly, this included balanced funds – as these are realistically the only option for retirement savers under the limitations imposed by Regulation 28 – as well as so-called ‘low-equity’ funds, as per the Asisa definition.

One may argue that funds with assets of between R1 billion and R10 billion would, because of their size, find it easier to outperform the larger funds. This is not untrue, but performance is obviously not uniform across the board.

Unsurprisingly, the three funds in this comparison that track global indices have far outperformed the rest. R100 000 invested in the CoreShares S&P 500 – which is unit trust wrapper that tracks the exchange-traded fund (ETF) – would be worth over R236 000 today.

That’s a return of 137%.

One may argue that this performance was due to the weaker rand, but the currency has only depreciated by 12% against the dollar since November 2016 (R14.08:$1). Even the Satrix Itrix Eurostoxx 50 unit trust – which tracks an index that has performed moderately in local currency terms (42% over five years) – is up 87%, with a value of almost R190 000 today.

Locally, the Fairtree Equity Prescient Fund has well-outperformed all others in this comparison, with a return of 84%. Sticking the R100 000 in the market and simply tracking the top 40 (using the Satrix 40 Portfolio) would give you R167 790 today – a return of 68%.

This is the value of R100 000 today if invested five years ago in the five largest funds in the country (excluding money market and non-rand denominated offshore funds):

It is astonishing that the Allan Gray Balanced Fund has barely outperformed its Money Market Fund (included in this comparison as a baseline as it’s the largest following Absa’s closure of its fund). This performance is practically indicative of any money market fund.

Perhaps more alarming is that the Allan Gray Equity Fund has underperformed both its Balanced Fund and its Money Market Fund.

A number of the so-called preservation type funds have also noticeably underperformed the money market funds.

Unit trust – R100 000 lump sum invested Value after five years Return
CoreShares S&P 500 R236 730 137%
Sygnia Itrix MSCI World R223 120 123%
Sygnia Itrix Eurostoxx50 R187 160 87%
Fairtree Equity Prescient Fund R184 180 84%
Satrix 40 Portfolio R167 790 68%
Prudential Core Value Fund/M&G Investments Equity Fund R166 370 66%
Ninety One Equity Fund R159 900 60%
Coronation Top 20 Fund R156 100 56%
Coronation Balanced Plus Fund R154 960 55%
Ninety One Managed Fund R153 700 54%
Nedgroup Investments Core Diversified Fund R152 640 53%
Ninety One Opportunity Fund R151 530 52%
Old Mutual Multi-Managers Balanced Fund of Funds R148 410 48%
Ninety One Cautious Managed Fund R148 210 48%
Prudential Balanced Fund/M&G Investments Balanced Fund R147 540 48%
Discovery Balanced Fund R147 530 48%
Nedgroup Investments Stable Fund R147 330 47%
Old Mutual Balanced Fund R147 220 47%
PSG Wealth Creator Fund of Funds R145 810 46%
Coronation Balanced Defensive Fund R142 490 42%
Foord Balanced Fund R141 060 41%
Allan Gray Stable Fund R140 750 41%
PSG Wealth Moderate Fund of Funds R139 750 40%
Allan Gray Balanced Fund R139 590 40%
Allan Gray Money Market R139 270 39%
Coronation Capital Plus Fund R138 960 39%
Allan Gray Equity Fund R135 870 36%
SIM Balanced Fund R134 270 34%
PSG Flexible Fund R133 570 34%
PSG Wealth Preserver Fund of Funds R133 260 33%
Prudential Inflation Plus Fund R129 360 29%
Old Mutual Investors Fund R119 540 20%

* Class A funds used when more than one class exists
* Data from FundsData as at November 22, 2021

Bottom-of-the-table Old Mutual’s Investors Fund (with R13 billion under management as at end-June) has not beaten inflation over the last five years. R100 000 invested in this flagship fund in November 2016 would be worth not even R120 000 today. The fund’s fact sheet confirms that it has delivered less than half the performance of the benchmark (3.3% annually for Class A versus 6.7%) over the last five years.

Stats SA reports consumer price inflation of 22.7% over the last five years (from December 2016).

For retirees, this number is ostensibly 22.9%. For those who are more well-off, inflation over the period has almost certainly been close to 10 percentage points higher – in other words, 33%.

This comparison is simply measuring the total return index over five years (which includes any dividends or interest payments).

What this exercise does show is just how destructive the limitations due to Regulation 28 can be when it comes to performance (with Regulation 28, equity exposure is limited to 75%, foreign investment exposure is limited to 30%). Being forced into a Reg 28-compliant balanced fund in a pension investment or retirement annuity has a major impact on returns that is not completely offset by the tax advantage.

Read: Treasury listens to industry on Regulation 28

This comparison is not, however, about punting offshore investment at the expense of everything else. But with a stagnant economy and a weakening currency over time, investors ought to be carefully considering their options.

R100 000 may not be much to many people. But what if you invested a R1 million lump sum five years ago? Placing it in a flagship balanced fund – or, worse, an underperforming equity fund – could’ve end up costing you more than R1 million.

  • CoreShares S&P 500 – R2.4 million
  • Sygnia Itrix MSCI World – R2.2 million
  • Satrix 40 Portfolio – R1.7 million
  • Discovery Balanced Fund – R1.5 million
  • Coronation Balanced Defensive Fund – R1.4 million
  • Allan Gray Balanced Fund – R1.4 million
  • (Any) Money Market Fund – R1.4 million
  • Allan Gray Equity Fund – R1.36 million
  • Old Mutual Investors Fund – R1.2 million

At a R10 million lump sum, the numbers become depressing.

Certainly makes one think.

This article originally stated that “importantly, this comparison does not necessarily include all fees.… When factoring in the impact of fees (a not-uncomplicated task), the performance of lower-cost index tracking funds will likely be boosted in comparison to the pricier actively managed funds. Over a longer timeline than just five years, the difference will be material.” Because only retail classes for funds were used, all fees were included in the calculation of total return for each fund over five years. Moneyweb regrets this error.


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Excellent article!!!… This is the type of information which needs to b exposed more often

It’s a pity Moneyweb didn’t tell us this 5 years ago ! Hindsight boys is the stupid persons past time …..

The principle is the same – start today and project your 5 year goal.

Nice to know in retrospect, but with equities at all-time highs, investing in these funds could be lethal. So which funds make sense if one had to invest now?

Where is the Sygnia Itrix MSCI US ETF? Should be in the top 3 or 4

End of comments.




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