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  Stevenn as you indicate that each year hundreds of unit trust close. Can I perhaps ask you to list just 20 in any year over the last 10 years. I do belief we should not belittle others for your own pu...  

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SA’s top unit trusts over ten years

Real estate funds dominate.

Investing in unit trusts is usually a long-term exercise. In general, these are vehicles that try to grow money over many years. 

When assessing their past performance it is therefore best to use at least a seven- or ten-year horizon, which also includes a number of market cycles. This allows you to see how funds have performed through varied market conditions. 

However, even then, one may find distortions because certain market sectors or asset classes performed unusually well over a certain sustained period. In South Africa over the past decade, this is certainly the case.

A list of the top-performing unit trusts over the last decade is dominated by real estate funds because listed property has had such an incredible run. While this asset class certainly still has characteristics that make it an attractive long-term investment, one shouldn’t necessarily presume that it will repeat its recent performance. 

Similarly, industrial sector equity funds have also featured strongly over the past decade because the big multi-national industrial stocks, led by Naspers, have been such strong performers on the JSE. Once again, however, one should be cautious about presuming that this can continue indefinitely, particularly since the market returns we saw in 2016 suggested that we are entering a new cycle .

The table below shows the top 20 funds to the end of December last year:

Unit trust performance to 31 December 2016

Fund

10 year annualised return

Absa Property Equity Fund A

17.74%

Stanlib Property Income Fund B1

16.20%

Coronation Industrial Fund P

15.96%

Prudential Enhanced SA Property Tracker Fund A

15.86%

SIM Industrial Fund R

15.83%

Catalyst SA Property Equity Prescient Fund A

15.72%

Stanlib Multi Manager Property Fund B1

15.42%

Investment Solutions Property Equity Fund A

15.38%

Investec Property Equity Fund A

15.28%

Coronation Property Equity Fund A

14.92%

Old Mutual SA Quoted Property Fund

14.50%

Centaur BCI Flexible Fund A

14.49%

Nedgroup Investments Financials Fund R

14.44%

PSG Flexible Fund

14.07%

Momentum Property Fund A

14.07%

Efficient BCI Property Fund A

13.82%

36ONE MET Flexible Opportunity Fund A

13.79%

BlueAlpha BCI All Seasons Fund A

13.69%

Nedgroup Investments Entrepreneur Fund R

13.62%

Stanlib Industrial Fund R

13.48%

Source: Morningstar

It is clear that property has been a great place to be invested over the past decade. Eleven of the unit trusts on this list are in the real estate sector.

However, there is still a fair range in their returns. The Absa Property Equity Fund outperformed the Efficient BCI Property Fund by just under 4% per annum, which is a significant difference when you compound it over ten years.

It is also noteworthy that only the top three property funds on this list outperformed the index. The FTSE/JSE Property Index showed an annualised total return of 15.76% over the past ten years.

There is a similar story among the industrial equity funds, where performance also varies quite widely. The difference between being invested in the Coronation Industrial Fund and the Stanlib Industrial Fund is nearly 2.5% per annum. In addition, none of these funds beat the index. The FTSE/JSE Indi 25 showed an annualised total return 16.42% over this period.

The most interesting unit trusts on this list, however, are perhaps the six outside of these two groups of funds that have benefited so much from having market conditions in their favour.

The two Nedgroup Investments funds on this list both stand out as the only unit trusts in their respective classes that make it into the top 20. Both the Nedgroup Investments Financials Fund and Nedgroup Investments Entrepreneur Fund, which is a small-cap portfolio, have consistently been top performers for a number of years.

The Nedgroup Investments Financials Fund has also significantly outperformed against the comparable index. Over the past ten years the FTSE/JSE Fini 15 has shown an annualised total return of 10.83%, which this unit trust has surpassed by more than 3.5% per annum.

The four flexible funds – Centaur, PSG, 36ONE and BlueAlpha – also deserve special mention. Not only did they all outperform all local general equity funds, but they all produced returns of at least 3.5% above the FTSE/JSE All Share Index.

Flexible funds are often overlooked by investors and advisers who perhaps aren’t aware of their benefits, but their long-term performance shows that they deserve consideration. All four of these funds are effectively equity portfolios that are better able to manage risk than general equity funds as they don’t have to remain fully invested in the stock market at all times. When they are unable to find good opportunities they can sit in cash, and that gives investors a much higher degree of protection, ultimately leading to better long-term returns.

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Suzean Haumann

Suzean Haumann

Brenthurst Wealth Management (Pty) Ltd
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Wonder what the index fund deriders will make of the facts about the indexes being such good performers…

Supersunbird, let us use the property funds as an example (as 11 of them are on the list). They are not the only property funds. Maybe Patrick can list the total number of them as at 10 years ago.

Then, from the article only 3 outperformed the Property Index. Now tell me, from those, how did you go about picking 1 or 2 of the 3 that eventually outperformed?

Share please, as us index fund proponents will sure like to know.

Sorry Supersunbird, read with half an eye clearly – my comments still valid, but inaccurately critical of your comment.

Based on the facts of the article, you are right, it is very difficult to argue against the index

Interesting. Well summarised. Whether one goes for a unit trust fund or a index fund, the real trick it to know which industry to be in the next 10 years. Indeed that’s impossible to guess. Hence why a flexible fund does make lots of sense. Or a general equity fund.

If you lop off devaluation of the Rand even the best performers are not providing exciting returns, that of course is due to the overall economic malaise in SA. So, would we have done better to be in funds offshore?

Looking at Brexit and Trump, things might start getting a lot more exciting for SA – especially once Zupta and the cronies are gone.

Trying to pick the winning fund manager is like trying trying to pick the winning slot machine, the casino bells will always be ringing for the jackpot machine but most gamblers will be losing as they are sitting at the wrong machine. There are more than 1400 unit trusts to chose from and many hundreds shut down each year, so what you see over 10 years is those few lucky funds that have survived. Yet most of these funds still underperform the index, even when comparing those winners that have survived.

To Stevenn. Best comment i’ve read in a long time. So true.

They might be the best “performing” funds over the last 10 years, but it also makes them expensive.

Nedgroup Financial Fund-13th best performing fund but yet Nedbank does not put it down as one of the approved funds for its planners.Yet they stuck their neck out for RE CM year after year until finally smelling the coffee.

apart from a long time ago – have never invested in a unit trust – nor do I ever intend to. ETF – yes, index funds – yes, direct shares -yes. too many hands to be greased along the way otherwise

Stevenn as you indicate that each year hundreds of unit trust close. Can I perhaps ask you to list just 20 in any year over the last 10 years.
I do belief we should not belittle others for your own purpose with things that are not the truth.

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