MOST ACTIVE SA EQUITY FUNDS FAIL TO BEAT S&P DOW JONES INDICES

S&P DOW Jones Indices has released the Spiva South Africa Scorecard Mid-year 2020. This semiannual report tracks the performance of South African-domiciled actively managed funds against relevant S&P DJ Indices to June 30. It revealed that, over the first six months of the year, 73% of South African equity funds underperformed the S&P South Africa 50, and 64% underperformed it over 12 months. In the case of global equity funds domiciled in South Africa, 68% of funds failed to beat the S&P Global 1200 Index over the six months to June 30, and 78% of them underperformed the index over 12 months.

INVESTORS often clump emerging markets together, but they are a diverse assortment of economies that have responded in a variety of ways to the Covid-19 crisis, often showing more resilience than developed economies. South Africa falls in the middle of the pack, and sometimes we need to step back and compare ourselves with our emerging-market peers for a better perspective on how we are faring.

In a presentation for the Morningstar Investment Conference earlier this month, Alistair Macdonald, senior vice-president and institutional portfolio manager at global investment firm Franklin Templeton, made a positive case for emerging markets post-covid-19.

He said that although the pandemic had devastated all markets, the focus has shifted to how economies will recover, and what steps governments should take to stimulate growth. And in this respect, emerging-market economies are, in many ways, better positioned than developed economies.

Macdonald said there is a noticeable difference in the fiscal and monetary policies being pursued by the governments of developed markets and those of emerging markets.

“Emerging markets, perhaps through greater experience of serious crises in the past, have actually been far more orthodox in their policymaking. We have seen a far greater reliance on interest