Al­lan Gray comes out tops in as­set man­ager sur­veys

Weekend Argus (Saturday Edition) - - FRONT PAGE -

Al­lan Gray was the top man­ager of ac­tively man­aged South African unit trust funds in the quar­ter to Septem­ber 30, ac­cord­ing to two sur­veys that use dif­fer­ent method­olo­gies.

Al­lan Gray re­tained its po­si­tion as the lead­ing man­ager in the PlexCrown sur­vey, while it ousted Fo­ord from first place in the Morn­ingstar rat­ings.

The PlexCrown sur­vey is con­ducted quar­terly and is used to de­ter­mine the win­ners of the an­nual Rag­ing Bull Awards. It rates col­lec­tive in­vest­ment schemes and scheme man­agers based on the riskad­justed re­turns of their funds.

The fund rat­ings take into ac­count con­sis­tency of per­for­mance and the risk a fund man­ager takes when in­vest­ing, with man­agers scor­ing higher for good re­turns at low risk. Funds are rated from one to five PlexCrowns.

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.

Six of Al­lan Gray’s eight funds that qual­ify to be in­cluded in the PlexCrown rat­ing sys­tem ob­tained an above-av­er­age rat­ing of four or more PlexCrowns.

PSG jumped from seventh in the sec­ond quar­ter to sec­ond place. Ryk de Klerk, an ex­ec­u­tive di­rec­tor of PlexCrown Fund Rat­ings, says this was largely a re­sult of a de­ci­sion to use the per­for­mances of the “clean” classes of PSG Wealth’s funds.

The prices of some A-class funds in­clude an an­nual fee paid The Old Mu­tual Gold Fund, the sole list­ing in the world­wide eq­uity un­clas­si­fied sub­cat­e­gory, con­tin­ued its stel­lar per­for­mance in the quar­ter to Septem­ber 30, although over three years it has given up its top spot to funds that in­vest in off­shore prop­erty, which make up the global real es­tate gen­eral sub-cat­e­gory. Most sub-cat­e­gories are show­ing lower av­er­age three-year re­turns com­pared with the quar­ter to June 30, with the South African eq­uity gen­eral sub-cat­e­gory fall­ing from an av­er­age an­nu­alised re­turn of 10.97 per­cent in June to 7.28 per­cent in the third quar­ter, only a lit­tle more than one per­cent above the lat­est Con­sumer Price In­dex in­fla­tion fig­ure of 6.1 per­cent. And de­spite av­er­age re­turns of more than 37 per­cent over the past 12 months, funds that in­vest in lo­cal re­sources shares (South African eq­uity re­sources) show dis­mal re­turns over three years, drop­ping from an av­er­age an­nu­alised re­turn of 2.78 per­cent at the end of June to mi­nus 0.33 per­cent at the end of Septem­ber. The av­er­age re­turns of funds in the pop­u­lar South African multi-as­set high-eq­uity sub-cat­e­gory dropped from an av­er­age an­nu­alised three-year re­turn of 10.54 per­cent at the end of June to 8.14 per­cent at the end of the third quar­ter. to a fi­nan­cial ad­viser, and are not “clean”, and the funds are at a dis­ad­van­tage when re­turns and rat­ings are cal­cu­lated. As a re­sult, De Klerk says, a rule of the PlexCrown rat­ing sys­tem has been amended so that, if an ad­vice fee paid to a fi­nan­cial ad­viser is in­cluded in the pric­ing of an A-class fund the fol­low­ing ap­plies:

• If the A-class fund is the only class avail­able to re­tail in­vestors, the A-class fund’s re­turns will be used; and

• If an­other class that does not in­clude fees paid to ad­vis­ers is avail­able to re­tail in­vestors (the pric­ing is “clean”), the re­turns of the “clean” class fund will be used, pro­vided the fund has a per­for­mance his­tory of at least five years. If it does not, the re­turns of the A-class fund will be used.

Ten of PSG’s 15 qual­i­fy­ing funds had above-av­er­age rat­ings of four or more PlexCrowns.

Ned­group In­vest­ments slipped from sec­ond to third place. Thir­teen of Ned­group In­vest­ments’s 20 rated funds had above-av­er­age rat­ings.

The Morn­ingstar rat­ings of as­set man­agers were in­tro­duced in the sec­ond quar­ter.

Morn­ingstar, a United States­based rat­ings agency, as­signs funds a rat­ing of be­tween one and five, based on risk-ad­justed 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 uses its in­di­vid­ual fund rat­ings to de­ter­mine two dif­fer­ent ag­gre­gate rat­ings for South African man­agers. It cal­cu­lates an over­all-weighted rat­ing and an as­set-weighted rat­ing for each qual­i­fy­ing man­ager and ranks them ac­cord­ingly. The over­all­weighted rat­ing is a sim­ple av­er­age of the man­agers’ in­di­vid­ual fund rat­ings. The as­set-weighted av­er­age is de­ter­mined by weight­ing the fund rat­ings ac­cord­ing to the amount of money in­vested in each fund.

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

Morn­ingstar weights the funds’ rat­ings ac­cord­ing to as­sets un­der man­age­ment. It does not have any sec­tor weight­ings. – Staff Re­porter

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