Allan Gray tops in fund returns report

Allan Gray topped the Morningstar SA Rating Analysis of unit trusts for the third quarter that compares funds’ risk-adjusted returns over three, five and 10 years to end-September 2016.

The report, Morningstar’s second quarterly one for SA, indicates that large asset managers can outperform smaller peers, despite the suggestion that smaller managers are more nimble and better able to take advantage of market moves.

Investment companies housed within large life insurers, on the other hand, performed poorly relative to peers, based on the report’s findings.

In order to be included in the ratings, an asset manager must manage at least R5bn in assets and have at least three retail funds with a three-year track record.

Allan Gray topped the overall-weighted and asset-weighted ratings among 22 asset managers. The latter gives more weighting to larger funds in an asset manager’s portfolio, while the overall-weighted ranking indicates the average quality of the overall fund range.

Foord Unit Trusts, Truffle Asset Management, Prudential Investment Managers, Nedgroup Collective Investments and Investec Fund Managers placed in the top five in at least one of the ratings.

Fund managers were also ranked across equities, fixed income and multi-asset portfolios. The strongest equity manager to the end of the third quarter was Foord, with Coronation topping the fixed-income rankings. Allan Gray was placed first in the multi-asset category.

Only three asset managers scored four- and five-star ratings — the maximum possible — for all their retail unit trust funds.

These were Allan Gray, Foord and Truffle.

Sygnia Collective investments scored four or five stars for 97% of assets.

“The survey is for reference purposes only and is backwards looking. It isn’t an indication of future performance,” said Tal Nieburg, MD of Morningstar SA.