In hindsight, there was only one place to be invested over the past 10 years – the US stock market.
In dollar terms, the S&P 500 has delivered a total return of 18.4% per annum since the start of 2011. In rand, it is up 24.4% per year.
This performance from US equities has fuelled the gains of global equity funds available to investors in South Africa.
Over the past decade, 17 of the 20 top-performing funds registered for sale in South Africa are US or global equity portfolios. The remaining three are all international flexible mandates.
Top-performing funds since Jan 1, 2011
|Name||Morningstar Category||10-year annualised total return (ZAR)|
|GinsGlobal US Equity Index||EAA Fund US Large-Cap Blend Equity||20.7%|
|Old Mutual Global Equity R||EAA Fund Global Flex-Cap Equity||20.6%|
|SFL STANLIB High Alpha Global Equity A||EAA Fund Global Large-Cap Growth Equity||19.6%|
|SEI GIF Global Select Eq USD Instl Acc||EAA Fund Global Large-Cap Blend Equity||18.3%|
|STOUT STANLIB Global Equity A||EAA Fund Global Large-Cap Growth Equity||18.3%|
|Nedgroup Inv Global Equity FF A||EAA Fund Global Large-Cap Blend Equity||18.1%|
|SFL STANLIB Multi Manager Glbl Equity A||EAA Fund Global Large-Cap Blend Equity||17.8%|
|Allan Gray – Orbis Global Equity FF||EAA Fund Global Large-Cap Blend Equity||17.8%|
|Ninety One Global Franchise FF A||EAA Fund Global Large-Cap Growth Equity||17.7%|
|Orbis Global Equity Investor||EAA Fund Global Large-Cap Blend Equity||17.7%|
|PSG Wealth Global Flexible FoF (USD) D||EAA Fund USD Flexible Allocation||17.6%|
|SIS International Growth FoF||EAA Fund Global Large-Cap Blend Equity||17.4%|
|STANLIB Global Equity FF A||EAA Fund Global Large-Cap Growth Equity||17.4%|
|Coronation Global Opp Eq [ZAR] FF A||EAA Fund Global Large-Cap Blend Equity||17.3%|
|AF Investments Global Equity FF||EAA Fund Global Large-Cap Blend Equity||17.2%|
|PSG Wealth Global Flexible FoF (GBP) D||EAA Fund GBP Flexible Allocation||17.1%|
|GinsGlobal Global Equity Index||EAA Fund Global Large-Cap Blend Equity||17.0%|
|Coronation Optimum Growth A||EAA Fund ZAR/NAD Flexible Allocation||16.9%|
|STANLIB MM Global Equity FF B1||EAA Fund Global Large-Cap Blend Equity||16.5%|
|Ninety One Global Strategic Equity FF R||EAA Fund Global Large-Cap Blend Equity||16.3%|
It is notable that every one of these funds has substantially under-performed the S&P 500. There is almost a 4% differential between the top performers and the total return of the index in rand terms.
Even then, it is worth pointing out that the top-performing portfolio available to South African investors over the past decade was an index fund. The GinsGlobal US Equity Index fund tracks the MSCI US Index, rather than the S&P 500, but has nevertheless topped the performance rankings over this period.
The highest active returns were generated by the Old Mutual Global Equity fund, managed by Ian Heslop of Jupiter Asset Management. The fund has the remarkable record of having delivered a positive double-digit return in eight of the last 10 calendar years. Over that period it only had one negative year, which was in 2016.
The only funds on this list that are not pure equity portfolios are the two PSG Wealth Global Flexible fund of funds, and the Coronation Optimum Growth fund. The former is only 70% invested in stocks, according to the latest available portfolio information. It has an 18% allocation to bonds and 8% to cash.
Similarly, the Coronation Optimum Growth fund has 74% of its portfolio in equities, with a sizeable portion of that in emerging markets, with 1% in bonds and 19% in cash.
A longer-term view
While the dominance of global equity portfolios is obvious over the past 10 years, it is worth considering the longer-term picture.
It is notable that when the review period is extended to 15 years, the performance table takes on a very different look. Only eight of these top 20 funds remain in the top 20.
The top-performer over that period is the SIM Industrial fund. In fact, five of the top 20 are either sector-specific industrial or resources funds.
South African general equity and flexible funds also show up strongly. Seven of the top 20 come from these categories.
This change is even more stark when looking at the past 20 years.
Top-performing funds since Jan 1, 2001
|Name||Morningstar Category||20-year annualised total return (ZAR)|
|Ninety One Commodity R||EAA Fund Other Equity||18.2%|
|Ninety One Value R||EAA Fund South Africa & Namibia Equity||17.5%|
|Coronation Industrial P||EAA Fund Other Equity||17.4%|
|Coronation Resources P||EAA Fund Other Equity||16.9%|
|Coronation Top 20 A||EAA Fund South Africa & Namibia Equity||16.2%|
|Nedgroup Inv Entrepreneur R||EAA Fund South Africa & Namibia Small-Cap Equity||16.1%|
|Ninety One Equity R||EAA Fund South Africa & Namibia Equity||15.6%|
|Allan Gray Equity A||EAA Fund South Africa & Namibia Equity||15.6%|
|Nedgroup Inv Mining & Res R||EAA Fund Other Equity||15.5%|
|Prudential Equity A||EAA Fund South Africa & Namibia Equity||15.3%|
When considering the past two decades, not a single global equity fund remains in the top 20. Instead, the performance chart is dominated by local equity portfolios, and notably some with extremely volatile return profiles.
The Ninety One Commodity fund and Ninety One Value fund, which top the list, have both delivered highly lumpy growth, in between some significant drawdowns. In 2015, for instance, the Ninety One Commodity fund lost over 18%. The Ninety One Value fund has delivered negative returns in three of the past five calendar years, contrasting with growth of 62% in 2016, and 33% in 2019.
At the other end of the spectrum, the worst performing funds over the past decade also have a distinct character. Five of them are property funds, with local general equity, small cap and Africa equity funds also making the list.
Worst-performing funds since Jan 1, 2011
|Name||Morningstar Category||10-year annualised total return (ZAR)|
|Select BCI Property A||EAA Fund Property – Indirect South Africa & Namibia||2.3%|
|Sanlam Institutional Special Opps||EAA Fund South Africa & Namibia Small-Cap Equity||1.8%|
|SIM Property A||EAA Fund Property – Indirect South Africa & Namibia||1.6%|
|Element Earth Equity SCI A||EAA Fund South Africa & Namibia Equity||1.3%|
|Nedgroup Inv Property A1||EAA Fund Property – Indirect South Africa & Namibia||1.2%|
|Marriott Property Income A||EAA Fund Property – Indirect South Africa & Namibia||1.0%|
|Oasis Property Equity A||EAA Fund Property – Indirect South Africa & Namibia||0.7%|
|STANLIB Africa Equity FF B3||EAA Fund Africa Equity||0.4%|
|Cannon Equity H4 A||EAA Fund South Africa & Namibia Equity||0.1%|
|Cadiz BCI Worldwide Flexible A||EAA Fund ZAR/NAD Flexible Allocation||-0.6%|
It is, however, surprising that the worst performing fund over this period is a worldwide flexible portfolio. For a fund that, according to its latest fact sheet, has 58% of its portfolio in offshore equity, the Cadiz BCI Worldwide Flexible fund has materially under-performed others in its category.
It is therefore, perhaps not that surprising that Cadiz CIO Adrian Meager took over management of the portfolio in August last year.
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.