Allan Gray back on top as best asset manager

Most South African equity general funds were unable to beat the sector’s index over the 12 months to the end of September. Martin Hesse reports

THE world’s financial markets, including the JSE, showed a welcome uptick in the third quarter of this year. In August, the FTSE/JSE All Share Index, after remaining virtually flat for two years (but with considerable volatility), broke free of its record of just above 55 000 points set in April 2015, and it has climbed significantly since then.

So what have the collective investment scheme companies made of the improved environment?

In the PlexCrown ranking of domestic management companies to the end of September, Allan Gray inched into first place ahead of PSG, which was leading the field at the end of the second quarter. Coronation Fund Managers and Nedgroup Investments also swopped places – with Coronation now third and Nedgroup fourth – and Prudential Investment Managers have remained in fifth place.

The companies are ranked on the PlexCrown ratings of their qualifying funds. Funds rated highest on risk-adjusted performance scoring five PlexCrowns and funds rated lowest scoring one PlexCrown.

Allan Gray’s move into the lead was on the back of two of its eight qualifying funds, the Allan Gray Equity Fund and the Allan GrayOrbis Global Equity Feeder Fund, increasing their ratings in the third quarter from four PlexCrowns to five PlexCrowns. Two other funds retained a five-PlexCrown rating: the Allan Gray Balanced Fund and the Allan Gray-Orbis Global Fund of Funds.

PSG has seven qualifying funds, and they all retained their PlexCrown ratings of the previous quarter, with five of its seven funds on the highest rating of five PlexCrowns: the PSG Equity Fund, PSG Diversified Income Fund, PSG Balanced Fund, PSG Flexible Fund and PSG Stable Fund.

Coronation has 19 qualifying funds, and, except for one fund, they all retained or improved on their second-quarter PlexCrown ranking. Five funds now boast five PlexCrowns: the Coronation Equity Fund, Coronation Industrial Fund, Coronation Resources Fund, Coronation Bond Fund and Coronation Optimum Growth Fund.

The top three managers of offshore funds are Nedgroup Investments (in first place at the end of the second quarter), Investec Asset Management (up from third place) and global asset manager PineBridge Investments (down from second place).

SUB-CATEGORY PERFORMANCE

In the collective investment sub-categories as defined by the Association for Savings & Investment SA, the funds in the global equity general, regional equity general and global multi-asset high-equity sub-categories performed strongly to the end of September, with average 12-month performance (in rands) of 15.58%, 14.37% and 8.87% respectively, according to ProfileData.

The only fund in the global equity unclassified sub-category, the Sanlam Investment Management Global Financial Feeder Fund, achieved a spectacular 27.79% annual return to the end of the quarter.

The sub-categories that fared worst (in rands) over the 12 months to the end of September were South African equity mid- and small-cap (–3.16%), global real estate general (–2.96%), and global and regional interest-bearing (–2.48% and –1.55% respectively).

The single fund in the worldwide equity unclassified sub-category, the Old Mutual Gold Fund, lost a whopping 36.41% of its value in the 12 months to September 30.

The South African equity general sub-category failed dismally to outperform the Alsi over the 12 months to September 30: the average fund returned only 4.49% against the Alsi’s 10.22%, according to ProfileData. However, there was wide variability in the returns of the 151 funds, with the Lion of Africa MET Equity Fund performing best, at 21.57%, and the Stanlib Value Fund doing the worst at –7.51%. Only 13 of the 151 funds beat the index after costs.

The popular South African multi-asset high-equity sub-category, which contains most of the “balanced” funds, only just beat the inflation rate of 5.1% to the end of September, delivering an average return of 6.01%, according to ProfileData. Again there was wide variability: the best return was from the Element Sanlam Collective Investments Balanced Fund (22.24%), while the worst was from the Imalivest Sanlam Collective Investments Balanced Fund (–5.49%).