More than just a footnote
Alexander Forbes has launched its own investment awards after many years of promising to do so. It already publishes the Manager Watch, and I had always hoped it would establish an event for institutional portfolios.
Instead, it has opted to enter the competitive unit trust space, where there are already two incumbents: the Raging Bull and Morningstar awards.
The Raging Bull Awards certainly have a catchy name. They offer the chance for Independent Media’s chair, Iqbal Survé, to distribute largesse among members of the asset management community. He might need their help, after all, if and when he lists his business. But the event has too many awards — maybe 70. Sometimes a global fund and a global feeder fund with the same underlying assets both win.
The Morningstar Awards (in which the FM is media partner) take the opposite view, and give barely half a dozen sector awards, and nothing for key sectors such as property.
The Alexander Forbes Asterisk Awards apparently do not refer to
Asterix the Gaul, my favourite children’s book series in the days long before Harry Potter. The asterisk is used in literature produced by Alexander Forbes Investments to remind people that this business was previously known as Investment Solutions.
Vlad Nedeljkovic, the best thing to have come out of Serbia since plum brandy, has worked hard at making the Asterisk Awards different from the Morningstar and Raging Bull versions. Survé still gives awards just for “straight” performance, with no adjustments. He has a category for risk-adjusted performance, but this is taking the somewhat old-fashioned view that risk is the same as volatility. Morningstar takes much the same view, and removes outliers that might have had a strong five-year performance but bombed in two of those five years.
Nedeljkovic says he is aiming to differentiate between luck and skill. He has adapted the research of the past 25 years on factor investing to isolate how much can be explained by factors such as value or international exposure and how much is true, unsystematic outperformance, or alpha.
The green factor
Probably much to the horror of Ismail Momoniat, deputy director-general of the National Treasury and a passionate believer in index funds, no passive funds will be included, nor will exchange traded funds (ETFS). There will be active ETFS one day, but they’re a long way off in SA.
Three Asterisks were awarded in the event’s inaugural year. The best equity fund was judged on Nedeljkovic’s factors. The winner was the maverick
Aylett Equity fund. Fund manager Walter Aylett has always been a bold investor. Fairtree Equity and Investec Equity were runners-up.
The best equity house included input from the Alexander Forbes manager research team, and in that category
Aylett came second to Fairtree, with its tamer approach. And PSG kicked Investec out of the third slot.
There is also an environmental, social and governance (ESG) award, for which the five best equity funds were assessed on their approach to green factors. Investec Equity was the winner, with Prudential Equity as runner-up.
A general equity fund will always be a blunt instrument for pursuing an ESG agenda — until some renewable-energy companies list on the JSE or unit trusts start using their influence to change corporate governance directly, instead of relying on a few activists to do their dirty work.