This year’s top per­form­ing funds

NAR­ROW FO­CUS: INDIA, AFRICA, EMERG­ING MAR­KETS Af­ter a long pe­riod of un­der­per­for­mance, emerg­ing and fron­tier mar­kets are once again in favour.

The Citizen (KZN) - - BUSINESS - Pa­trick Cairns

Since mid-2014 SA in­vestors have had to get used to the idea of lower re­turns. Over the last three years, the av­er­age multi-as­set high-eq­uity unit trust has de­liv­ered an­nu­alised per­for­mance of around 8.5% - not sig­nif­i­cantly bet­ter than one could have earned in the money mar­ket.

How­ever, 2017 has seen very in­ter­est­ing per­for­mances from cer­tain re­gions. Th­ese prob­a­bly aren’t places into which most in­vestors would place large parts of their port­fo­lios, but it shows there’s some life in the world.

Ta­ble 1 lists some top-per­form­ing lo­cal unit trusts for the year to date:

All of th­ese funds are in­vested off­shore and have a fairly nar­row fo­cus – India, Africa and emerg­ing mar­kets.

Broadly, this re­flects the global shift to­wards emerg­ing and fron­tier mar­kets over the last ten to 24 months. Af­ter a long pe­riod of un­der­per­for­mance, th­ese re­gions are again in favour.

The San­lam India Op­por­tu­ni­ties Fund ben­e­fited hugely from the pos­i­tive sen­ti­ment shown to­wards the In­dian mar­ket since Na­hen­dra Modi took over as Prime Min­is­ter in 2014. It’s de­liv­ered a five-year an­nu­alised re­turn of 19.51% - ex­cep­tional in the cur­rent en­vi­ron­ment.

The Denker unit trust is a rel­a­tively new fund so it doesn’t have a track record to an­a­lyse, but the Corona­tion Global Emerg­ing Mar­kets of­fer­ing has a very in­ter­est­ing per­for­mance his­tory. As the ta­ble be­low shows, it’s had two ex­cep­tional years in the last five, with three years of al­most no growth in be­tween:

This isn’t un­usual for an emerg­ing mar­kets fund, as re­turns can be ex­tremely volatile. This is even more pro­nounced in funds in­vest­ing in fron­tier mar­kets, like the two African eq­uity funds on the list above.

De­spite the year it’s had so far, the ALUWANI fund’s three-year re­turn is neg­a­tive; over five years it’s shown an an­nu­alised per­for­mance of just 7.44%. As the ta­ble be­low shows, in­vestors have had a wild ride over this pe­riod:

De­spite the 2017 surge, the fund is still well be­low its mid2014 highs. This is due to the sharp drop last year that wiped out most of those past gains. This is a big rea­son why it’s so dif­fi­cult for in­vestors to put money into th­ese kinds of funds. Their per­for­mance is so volatile that you need a strong con­sti­tu­tion to bear it.

For many peo­ple, how­ever, emerg­ing and fron­tier mar­kets’ long-term growth po­ten­tial is too strong to ig­nore. They’re there­fore will­ing to al­lo­cate a por­tion of their port­fo­lio to th­ese kinds of funds.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.