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The past decade’s top-performing SA unit trusts

And the worst-performing funds.
US and global equity funds dominate. Image: Shutterstock

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%

Source: Morningstar

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%

Source: Morningstar

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.

The under-performers

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%

Source: Morningstar

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.

COMMENTS   10

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So you were very lucky if you broke even in dollar terms.

I’m comfortable in the knowledge that as an amateur investor, I have outperformed all South African unit trusts over the same period.

Really?

Yes really.

I still wonder why these fund managers and salespeople disguised as “financial advisors” take fees and commissions.

I realised a decade ago that what I was getting through their advised and managed investment schemes was pittance compared to what I was getting in returns just playing around with spare cash that I had.

I withdrew most of my funds and started managing investments myself.

I’ll never go back to investment houses or active managers again.

There simply is no value add unless you are completely numerically illiterate, and even then, if you were to just go into a few index funds you would probably outperform most of them anyway.

I did with ”fixed” annuities!

The Spark. Sorry to burst your bubble but your claims are bogus. Do you even know how to calculate returns? What makes you, a self-proclaimed ‘amateur, think you can outperform the highly skilled and qualified investment professionals that manage these funds?

As much as I fully support the notion and advantages of low cost index funds/ETF’S etc its quite important to compare apples with apples. I’m not an expert on the mandate of each global funds, but I’m not convinced that each one aims to exclusively track SP 500. You have to too the the benchmark of each fund and compare that to the relevant indicies. It will furthermore be noteworthy to also include the performance of other global equity indicies over the period in ZAR such as FTSE100, Eurostroxx 50, MSCI world, MSCI emerging markets, Nikkei 225, ShangHai etc etc. Then one also need to take into consideration minimum costs that will be incurred such as asset swop fees, VAT, trading costs. I think that might give you a better picture.

My SA portfolio looks pretty good. If the property and banking sector can make a return I would have had way more.

These are the most poultry returns ever. Boggles the mind that absolute novice investors looking after their own funds can do better by a country mile.

OM offshore fund returns in our portfolio was 22% pa. Cashed in and doing 1007% pa.

This is why Financial Advisors will become extinct!

For context compare these results with the ETF’s, and take costs into account as well.

For myself, I am not concerned with past performance. Give me some hope for the future. I also do my own investing and at least cannot blame anybody else.

End of comments.

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