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97% of local unit trusts show positive returns YTD

Local property funds have been significant gainers.
Image: Shutterstock

The first half of 2021 was an extremely positive one for local investors. Just 3% of South African-domiciled unit trusts recorded a negative return in the first six months of the year.

In contrast, 31% of the market delivered double-digit positive returns.

Significantly, South African-focused portfolios were prominent among the top performers. As the table below shows, more than 90% of the biggest gainers were invested predominantly in local markets.

SA unit trust top performers in H1 2021 by category
Category No. of funds in top 100
South Africa real estate general 36
South Africa equity general 30
South Africa multi-asset flexible 9
South Africa multi-asset high equity 7
South Africa equity mid/small cap 7
Global equity general 3
South Africa equity resources 3
Worldwide multi-asset flexible 2
Global real estate general 1
Unclassified 1
Global equity unclassified 1
South Africa multi-asset low equity 1

Source: Morningstar

Most notably, local property funds have been significant gainers this year as the sector has rebounded. This is a significant turnaround from 2020, when every fund in this category delivered a negative return of at least -20%.

South African equity funds have also found conditions far more favourable, with value managers in particular enjoying a resurgence. This is perhaps best demonstrated by the 22% gain for the year to date in the Cannon Equity H4 fund, which has had a torrid few years of late. Its five-year return is still negative, despite the recent gains.

There have also been significant returns from mid- and small cap South African equity funds. These were hit hard last year, with six of the nine unit trusts in this category showing a negative return. For the year to date (YTD), however, every one of them is up at least 13%.

Global and worldwide funds hardly feature among the top performers in the first half of 2021. That is a meaningfully different picture to what happened last year.

As the table below shows, only 20 of the top 100 performing funds over 2020 were South African. Six of those were resource funds. The list is dominated by global equity and worldwide flexible portfolios.

SA unit trust top performers in 2020 by category
Category No. of funds in top 100
Global equity general 44
Worldwide multi-asset flexible 15
Global multi-asset flexible 11
South Africa equity resources 6
South Africa multi-asset high equity 6
South Africa equity general 4
South Africa multi-asset flexible 3
Global multi-asset high equity 2
Regional equity general 2
Worldwide equity general 2
Global interest-bearing variable term 1
Global real estate general 1
Regional equity unclassified 1
Regional multi-asset flexible 1
South Africa equity industrial 1

Source: Morningstar

It is notable that within the handful of funds showing a negative return for the first six months of 2021, five were among the top 30 performers last year.

The sharpest reversal has been the IP Global Momentum Equity fund, which was last year’s biggest gainer. After returning 98.2% in 2020, it is down -2.8% so far this year.

The Old Mutual Gold fund has also experienced a swift change in fortunes. After a 25.4% gain last year, it lost 14.8% in the first six months of 2021.

Top performers

The top 10 gainers for the year to date are a mixed bag. Although the list is dominated by South African-focused portfolios, these fall into five different categories.

SA unit trust performance
Fund Category YTD return 3-yr return*
Blue Quadrant Worldwide Flex Prescient A WW MA flexible 65.3% 10.9%
Chiron Realfin Multi Asset Flexible A Unclassified 41.5%
Bridge Equity Income Growth A SA EQ general 34.6% 2.2%
SIM Resources SA EQ resources 31.6% 34.4%
Baobab SCI Flexible B1 SA MA flexible 28.1% 9.1%
Old Mutual Mid & Small-Cap R SA EQ mid/small cap 27.4% 5.5%
1nvest Sector Neutral Value Index A SA EQ general 27.2% 6.0%
Ninety One Emerging Companies R SA EQ mid/small cap 27.0% 5.7%
Stanlib MM Flexible Property B1 SA RE General 27.0% -2.3%
SIM small cap A SA EQ mid/small cap 26.0% 5.1%

*annualised
Source: Morningstar

Interestingly, the top performer is a worldwide flexible portfolio. The Blue Quadrant Worldwide Flexible Prescient fund does, however, have a large chunk of its assets invested in South Africa. The fund’s latest fact sheet reflects a local equity allocation of 42.5%.

After posting negative returns in three of the past four calendar years, the deep value portfolio has enjoyed a sharp reversal. It is up 118.5% over the past 12 months.

It is noteworthy that the best-performing property unit trust over this period is the Stanlib Multi-Manager Flexible Property fund. It uses BlackRock, Catalyst Coronation and Stanlib as its underlying managers, and has out-performed all single-manager funds over this period.

This property fund is also among six funds on this list that have come out of periods of underperformance. The Bridge Equity Income Growth fund, Old Mutual Mid & Small-Cap fund, 1nvest Sector Neutral Value Index fund, Ninety One Emerging Companies fund and SIM small cap fund all have three-year returns that remain below the industry mean.

The most consistent performer on this list is the SIM Resources fund. Strong commodity prices have continued to support a portfolio that has nearly 30% of its assets in platinum stocks.

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

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

This article was updated on 19 July 2021 to reflect that the FNB Multi-Manager funds and Ashburton Growth fund were reflecting incorrect returns in Morningstar data.

COMMENTS   1

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They havent gained anything they have just recovered some of their losses, listed property is a dead horse in south africa nevermind the damages to these portfolios after all the riots

End of comments.

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