UNIT TRUSTS |

THE FUNDS THAT DELIVERED OVER THE FIRST QUARTER

AFTER a worrying wobble at the end of last year, financial markets bounced back in the first quarter of 2019, with the FTSE/JSE All Share Index (Alsi) delivering 7.97% for the three months, according to ProfileData.

Resources shares fared best, after a strong performance last year, too. The FTSE/JSE Resources 10 Index was up 16.18% for the quarter, and up 40.55% for the 12 months to the end of March.

The small/mid-cap, financials and listed property sectors appear still to be in the doldrums, however: the FTSE/JSE Small and Mid Cap Index was up 2.76% for the quarter but down 3.74% year-on-year; the FTSE/ JSE Financials Index was down 0.45% for the quarter and down 5.82% y/y, while the FTSE/JSE SA Listed Property Index was up 1.45% for the quarter but down 5.68% y/y.

HOW HAVE YOUR UNIT TRUSTS BEEN FARING?

The best performers have been resources funds and general equity funds with high exposure to resources shares. Resources funds returned 16.75%, on average, for the quarter and 35.50% y/y, with the Investec Resources Fund the top performer, delivering 23.87% and 45.37%, respectively. General equity funds averaged 5.84% for the quarter but are up just 1.34% y/y. However, returns vary widely: over the 12 months to March 31, the Investec Value

Fund gained 22%, while the worstperforming funds were down by more than 11%.

As is to be expected among the domestic multi-asset funds, there was wide variability of returns. Flexible funds, which have the flexibility to invest in any asset class in any proportions, were up 4.53% (3.46% y/y); high-equity funds up 5.7% (5.71% y/y); multi-asset income up 2.3% (7.76% y/y); medium-equity funds up 5.25% (6.38% y/y); and low-equity funds up 3.97% (6.74% y/y), according to ProfileData.

The best-performing actively managed multi-asset fund over 12 months was the high-equity Long Beach Managed Prescient Fund, which returned 17.50% for its investors. Not far behind was the low-equity Sanlam Select Wealth Protector Fund, which, at lower risk, delivered 15.81%. But outperforming the actively managed funds was the CoreShares Preftrax

ETF, which tracks the FTSE/JSE Preference Share Index – it delivered 25.84% y/y.

Among interest-bearing funds, money market funds delivered 1.94% (7.24% y/y) on average, short-term funds 1.95% (7.97% y/y), and variable (longer-term) funds 2.89% (2.75% y/y).

OFFSHORE INVESTMENTS

The rand/dollar price closed at R14.13 to the dollar on December 31 last year, strengthened to R13.32 at the beginning of February, and weakened to R14.34 on March 31.

Year-on-year, however, it was down 17%, from R12 to the dollar at the end of March last year, at the height of “Ramaphoria”.

Even without the positive impact of the weaker currency on rand returns, global unit trust funds delivered strongly. The S&P 500 had its “best quarter in years”, according to Gielie de Swardt, the head of retail distribution at Sanlam Investments, after it climbed out of the trough it dug for itself in December. Funds in the global general equity category returned an average of 12.99% in rands (21.63% y/y).

De Swardt says: “Global markets were helped along by a dovish Fed stance… the markets took note of the Boeing plane crash, but the Dow Jones escaped most of the negative sentiment at first, though Boeing shares later dropped over 6%. While still cautious about the Fed’s lowered growth and inflation projections, global markets ended the first quarter on an overall positive note – a delightful change from last quarter’s sullen December finish.”

In contrast with the domestic listed property market, funds invested in offshore property markets excelled: the global real estate category returned 14.65%, on average, for the quarter (in rands) and 34.10% yearon-year.