New Morn­ingstar sur­vey places Fo­ord as top man­ager

Weekend Argus (Saturday Edition) - - LIFE - LAURA DU PREEZ

Fo­ord Unit Trusts is the top as­set man­ager in a new sur­vey, re­leased by Morn­ingstar, that ranks South African col­lec­tive in­vest­ment scheme man­age­ment com­pa­nies ac­cord­ing to the per­for­mance of all their qual­i­fy­ing funds un­der man­age­ment.

Al­lan Gray was ranked sec­ond and bou­tique man­ager Truf­fle third, based on two dif­fer­ent av­er­ages of their re­tail funds’ per­for­mance-based Morn­ingstar rat­ings.

Morn­ingstar, a United States-based rat­ings agency, as­signs funds a rating of be­tween one and five, based on riskad­justed re­turns over three, five and 10 years, weighted in favour of the longer pe­ri­ods. Cer­tain funds, such as money mar­ket funds and those with short track records, are not rated.

Morn­ingstar has now used its in­di­vid­ual fund rat­ings to de­ter­mine two dif­fer­ent ag­gre­gate rat­ings for South African man­agers to the end of June. It cal­cu­lated an over­all-weighted rating and an as­set-weight­ing rating for each qual­i­fy­ing man­ager and ranked them ac­cord­ingly. The over­all-weighted rating is a sim­ple av­er­age of the man­agers’ in­di­vid­ual fund rat­ings. The as­setweighted av­er­age is de­ter­mined by weight­ing the fund rat­ings ac­cord­ing to the amount of money in­vested in each fund.

A man­ager must have at least R5 bil­lion in as­sets un­der man­age­ment in funds that can be rated and three funds for re­tail in­vestors with Morn­ingstar rat­ings to be in­cluded in the sur­vey.

The Morn­ingstar man­ager sur­vey dif­fers from the PlexCrown Fund Rat­ings sur­vey of man­age­ment com­pa­nies (above) in that Morn­ingstar re­quires only three rated funds, while the PlexCrown sur­vey re­quires man­agers to have one fund at least in each of four broad unit trust sec­tors: South African eq­uity and real es­tate, South African in­ter­est-bear­ing (in­clud­ing multi-as­set in­come), South African multi-as­set (ex­clud­ing multi-as­set in­come), and rand-de­nom­i­nated global and world­wide.

Man­agers such as Fo­ord and Truf­fle are ranked in the PlexCrown rat­ings in the sec­tors in which they par­tic­i­pate, but do not qual­ify for an over­all rating for the man­age­ment com­pany rank­ings be­cause they do not have a fund in each sec­tor.

The other dif­fer­ences be­tween the PlexCrown and Morn­ingstar rank­ings of man­agers will arise be­cause:

• The PlexCrown rat­ings are based on four or five dif­fer­ent mea­sures of risk and re­ward, while the Morn­ingstar rat­ings are based on per­for­mance, risk and fees.

• The PlexCrown rat­ings used for the man­age­ment com­pany rat­ings are only those for funds with a five-year track record, while the Morn­ingstar anal­y­sis in­cludes funds with only a three-year track record.

• A man­ager’s over­all PlexCrown rating is cal­cu­lated in two steps. First, its av­er­age rating in each of the four broad unit trust sec­tors is de­ter­mined from its fund rat­ings in that sec­tor weighted ac­cord­ing to the as­sets un­der man­age­ment in each fund in each sec­tor. Then an over­all av­er­age rating is de­ter­mined us­ing each of four broad sec­tor av­er­age rat­ings with the fol­low­ing weight­ings: South African eq­uity and real es­tate, 25 per­cent; South African in­ter­est-bear­ing (in­clud­ing multi-as­set in­come), 25 per­cent; South African multi-as­set (ex­clud­ing multi-as­set in­come), 35 per­cent; and rand-de­nom­i­nated global and world­wide, 15 per­cent. This means the rat­ings of the funds in the sec­tors with higher weight­ings have a greater in­flu­ence on the over­all av­er­ages in the PlexCrown sur­vey.

Morn­ingstar’s methodology for its as­set-weighted av­er­age weights the funds’ rat­ings ac­cord­ing to as­sets un­der man­age­ment. It does not have any sec­tor weight­ings.

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