More than just a foot­note

Financial Mail - - INVESTOR’S NOTEBOOK -

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.

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