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The top unit trusts of 2017

A wide range of strategies.

South African investors enjoyed a much better year in 2017 than they have for a while. The strong performance of the JSE in the third and fourth quarters meant that by far the majority of local unit trusts delivered inflation-beating returns for the 12 months to December 31.

What is particularly interesting about the list of last year’s top performers, however, is how varied it is. It is not dominated by funds from any particular category or strategy.

According to figures from Morningstar, the top 20 includes smart beta products, index funds, resource funds, property funds and unit trusts with emerging market and African exposure. Quality strategies, momentum strategies and value strategies also all appear in the list.

The table below shows the top 20 performers for the year:

Top-performing unit trusts in 2017

Fund

12-month performance

Satrix Quality Index Fund A1

38.88%

Satrix Momentum Index Fund A1

31.87%

Momentum MoM Emerging Managers Growth Fund

31.37%

Ci Engineered Equity Core Fund A

28.16%

Sanlam India Opportunities Feeder Fund A

28.08%

Absa Property Equity Fund A

26.79%

Satrix Dividend Plus Index Fund A1

26.40%

Coronation Resources Fund

26.33%

Sygnia Divi Index Fund A

26.22%

Coronation Global Emerging Markets Flexible Fund [ZAR] A

26.22%

Denker SCI Emerging Markets Feeder Fund A1

24.87%

Momentum MoM Ultra Long-Term Value Fund

24.44%

ALUWANI Africa Equity Fund A

24.34%

Metope MET Property Fund A

24.08%

STANLIB Resources Fund A

23.88%

CoreShares S&P SA Top 50 Fund A

23.74%

Argon BCI Worldwide Flexible Fund A

23.54%

Satrix SWIX Top 40 Index Fund A1

23.31%

ALUWANI Top 25 Fund A

23.27%

Aeon Smart Multi-Factor Equity Prescient Fund A

22.60%

Source: Morningstar

What is not shown on this list is that the STANLIB Enhanced Yield Abil Retention Fund was actually the year’s top performer, returning over 50%. However, since this is just a side pocket fund holding only African Bank debt, it has been excluded as it is not really comparable to other funds.

The Satrix Quality Index Fund is therefore last year’s real top performer, and what is significant is that this is not because of a large holding in Naspers. The media giant is not even one of this smart beta fund’s top 10 holdings.

The unit trust’s largest exposures are to Mr Price, Bidvest, Capitec, Tiger Brands and Standard Bank. It also benefited from a fairly large position in Kumba Iron Ore.

The second placed Satrix Momentum Index Fund, however, ended the year heavily weighted towards Naspers. Its November fact sheet shows that it had nearly 27% of its portfolio in the stock.

It is notable that the Sanlam India Opportunities Feeder Fund had another good year. The Indian market has delivered exceptional returns since late 2013, and this fund has benefited from that.

The Absa Property Equity Fund was the top real estate fund last year. It is, in fact, the top performing unit trust in its category over one, three, five and ten years.

It is joined on this list by the much younger Metope MET Property Fund. This unit trust was only launched at the start of 2015 by the specialist boutique manager Metope Investment Managers, and has done extremely well in this short period.

The portfolios of both of these funds are distinctly different to the local property index and therefore investors are benefiting from genuine active management. To illustrate this fact, the Absa Property Equity Fund’s largest holding is Arrowhead, while Metope’s biggest position is in Echo Polska.

There are a number of funds on the list with exposure to emerging markets, and Africa. The Aluwani Africa Equity Fund is particularly interesting as it had a very poor run in 2016, falling over 30%.

Investors in African markets outside of South Africa should anticipate this kind of volatility, but as many economies on the continent continue to show strong economic growth there are opportunities for long term performance. This is illustrated by the Aluwani Africa Equity Fund’s eight-year track record, which is shown in the table below:

Aluwani Africa Equity Fund annual returns

2010

2011

2012

2013

2014

2015

2016

2017

10.48%

3.40%

29.32%

49.89%

3.61%

4.05%

-30.69%

24.34%

Source: Morningstar

It is interesting that the CoreShares S&P SA Top 50 Fund was the best-performing large cap index fund for the year, delivering returns ahead of the Satrix SWIX Top 40 Fund and all the Top 40 funds in the market. This is because it caps the exposure it can have to any stock at 10%.

Naspers is therefore a much smaller component of this fund than it is in traditional Top 40 funds. Despite this, the CoreShares S&P SA Top 50 Fund outperformed, possibly due to its broader portfolio.

Note: Past performance is not an indicator of future performance, particularly over a period as short as one year.

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COMMENTS   4

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What was that negative comment again from Rob-snout or Robert-from-Sydney about the performance of S.A. domiciled investments?

or is that RobertinDisney

You mean Sheepless-in-Sidney?

Shhhhh!

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