Many fund managers turn their noses up when we look at the track record of their funds. But full transparency on investment returns is critical.
Looking at the Morningstar numbers for the year to date, after five rather ropey years, their clients should mostly get real returns — though the difference between some active managers is striking.
Bear in mind that a standard all share index (Alsi) tracker would have earned 8.6% in the first 10 months of the year. For those who chose not to benchmark themselves against the Alsi, the returns are either very good, or pretty bad.
Take -5% for PSG Equity — ending a lucky streak of at least five years — and less than 1% for Visio General Equity Fund, another strongly nonbenchmark-focused manager.
A few funds are only just positive, such as Mazi Equity and the maverick RECM, while retreaded hedge fund manager Bateleur has struggled to eke out 1%.
On the other side of the spectrum, one outstanding performer has been Methodical, with a 22.2% return.
The fund, founded by ex-Investec executive Ross Reuvers, is a systematic momentum-based fund. Reuvers does not like jargon such as "smart beta", but it is not far off that.
The outlier in the category is Investec Value, which should perhaps be moved into a miscellaneous funds category.
Under John Biccard, it is hardly an SA general equity fund anymore, with 29% of the fund in offshore assets, and almost a third of the fund held in two shares: Impala Platinum and Sibanye.
Still, it has earned 32.6% in the year to date, in spite of some chunky holdings in two bombs, Brait and Intu Properties.
It must be puzzling to clients that a staunch value manager such as Perpetua has done so badly in comparison to Biccard.
But Perpetua overlord Delphine Govender’s portfolio is focused far more on domestic industrials. She is highly competent so let’s assume it is simmering and not quite on the boil.
Some large managers live on to fight another day, even with negligible real returns.
Both Foord Equity and Allan Gray Equity have returned about 4.5% in the year to date.
But it has been a strong recovery for Coronation Equity and Sanlam General Equity, both returning close to 14%, though Sanlam may battle to keep this up as the current portfolio manager, Patrice Rassou, is leaving to head the Ashburton investment team.
Kagiso Equity Alpha has done even better, with 16.8% — it must surely now be the go-to BEE asset manager for equity and balanced portfolio, especially after Mazi and Perpetua’s slump.
And Stephen Arthur’s team at Absa Asset Management (Abam) did well with the 14.6% gain from the Absa Prime Equity Fund, its large-cap fund.
It is no secret that the bank is trying to sell Abam, or at least set up a joint venture with a BEE party.
African Rainbow Capital looks like a possible buyer.
There has been a significant difference between the returns of domestic-only general equity funds and those that are mandated to take an offshore allocation of up to 30%.
Compare Stanlib Equity’s return of 10.7% to its Stanlib SA Equity fund, which gave barely 1.2%.
Rezco has given a solid 13% return and Truffle’s 11.4% is a comfortable premium on the benchmark.
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