Registered users can save articles to their personal articles list. Login here or sign up here

SA’s unsung unit trust heroes

The funds you may be overlooking.

CAPE TOWN – Last week we looked at the top-performing general equity unit trusts in South Africa over the last one, five and ten years. It is natural for investors looking at equity investments to gravitate towards this category, as it is one of the most high profile. 

However, it must be noted that not all equity funds are to be found here. There are a number of very good equity funds in other places that investors may overlook simply because they are classified differently.

If one spreads the net a little wider, one can find a number of funds that have delivered performances as good or better than the top-performing general equity funds. One just needs to know where to look.

Perhaps the most obvious place is in the equity large cap and equity small cap categories. These are funds that either focus exclusively on stocks within the top 40, or exclusively those outside it.

They may not necessarily be best-used as a core holding in an investment portfolio, but they can be used to tilt the bias one way or another.

One could also look at sector funds, and in this respect industrial funds have been particularly strong performers over the last five to ten years, although financial funds have also done well. Once again, these funds are probably best used in conjunction with funds with a broader mandate to reduce the risk of being over-exposed to a single sector.

The third and final place one might find a hidden gem, and probably the category most overlooked, would be the multi asset flexible funds. There are a number of funds here that are essentially equity funds, but which stay in this category to allow themselves the option of defaulting to cash when they don’t see any buying opportunities in the market.

The below table shows the top fifteen equity funds in South Africa over the last five years, allowing for the inclusion of not only general equity funds but those from the above categories as well.

 

Top equity funds to 31 December 2014

Fund

Category

5 Yr annualised total return

SIM Industrial Fund-R

SA equity – industrial

26.26%

Satrix Indi Portfolio ETF

SA equity – industrial

26.00%

Coronation Industrial Fund

SA equity – industrial

25.96%

Nedgroup Investments Entrepreneur Fund-R

SA equity – small cap

23.65%

Nedgroup Investments Financials Fund-R

SA equity – financial

23.32%

Centaur BCI Flexible Fund

SA multi asset – flexible

23.25%

36ONE MET Flexible Opportunity Fund

SA multi asset – flexible

22.36%

Stanlib Industrial Fund-R

SA equity – industrial

21.76%

Coronation Financial Fund

SA equity – financial

21.61%

Old Mutual Industrial Fund-A

SA equity – industrial

21.15%

NewFunds eRafi SA Financial 15 Index Fund ETF

SA equity – financial

21.05%

ClucasGray Future Titans Prescient Fund-A1

SA multi asset – flexible

21.00%

Foord Equity Fund

SA equity – general

20.89%

Visio BCI Actinio Fund

SA multi asset – flexible

20.49%

Harvard House BCI Equity Fund

SA equity – general

20.34%

FTSE/JSE All Share Index

 

15.79%

Source: Morningstar

 

It is clear that general equity funds do not feature all that highly here. There are only two of them on the list, and both fall outside of the top ten.

To be fair, industrial and financial sector funds have had the wind at their backs, with resource stocks being so out of favour. They have almost defaulted into doing better than their general equity counterparts by not being able to buy into a sector that has been a heavy drag on the overall market.

It must also be noted that only one actively-managed industrial fund beat Satrix’s index tracker over this period. In the financials sector, there are also only two actively-managed funds showing returns above the best of the passive products.

Although the Nedgroup Investments Entrepreneur Fund is the only fund on the list that falls into the small cap category, the ClucasGray Future Titans Prescient Fund is essentially a small cap fund. It only invests in stocks outside of the FTSE/JSE Top 40 Index.

The other three flexible funds in the list all run broad equity portfolios. One could even take the view that the Centaur Flexible Fund was really the best-performing general equity fund over the last five years. This is despite it holding more than 16% of its assets in cash at the end of last year.

Taking a slightly longer view, the below table shows the top equity funds in South Africa over ten years:

 

Top equity funds to 31 December 2014

Fund

Category

10 Year annualised total return

Satrix Indi ETF

SA equity – industrial

22.66%

SIM Industrial Fund-R

SA equity – industrial

22.39%

Coronation Industrial Fund

SA equity – industrial

22.16%

Stanlib Industrial Fund-R

SA equity – industrial

20.89%

Centaur BCI Flexible Fund

SA multi asset – flexible

20.52%

Coronation Top 20 Fund

SA equity – general

20.39%

Foord Equity Fund

SA equity – general

20.10%

Absa Large Cap Fund

SA equity – large cap

19.84%

Nedgroup Investments Entrepreneur Fund-R

SA equity – small cap

19.58%

Prudential Equity Fund

SA equity – general

19.00%

Visio BCI Actinio Fund

SA multi asset – flexible

18.90%

Coronation Equity Fund

SA equity – general

18.84%

Absa Select Equity Fund

SA equity – general

18.79%

Nedgroup Investments Financials Fund-R

SA equity – financial

18.67%

Prudential Dividend Maximiser Fund

SA equity – general

18.61%

FTSE/JSE All Share Index

 

18.00%

Source: Morningstar

 

It is notable that many of the same funds appear on this list. And once again, the Centaur Flexible Fund holds its position as the top performer amongst those without a sector bias.

The industrial funds top the list again, although the index tracker takes first place over ten years. This is largely a function of the extraordinary growth in the share prices of the big rand-hedge industrials, which Satrix generally holds in much higher weightings than active managers.

Naspers is currently 17.56% of the Satrix portfolio, SABMiller is 17.41% and Richemont 13.65%.

General equity funds feature higher up here, with five of them delivering better returns than the best financial sector fund. There is also a place in the top ten for the Absa Large Cap Fund, which is the top performer in its category over this period.

Note: Although not on the above list, the Rezco Value Trend Fund, which is in the multi asset – high equity category, returned an annualised 18.81% over the ten years to the end of 2014. As a true balanced fund, it wasn’t part of this analysis.

For more, visit Moneyweb’s Click-a-unit trust/ETF tool.

COMMENTS   0

Comments on this article are closed.

LATEST CURRENCIES  

ZAR / USD
ZAR / GBP
ZAR / Euro

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2