Not actives’ year

It proved to be a tough year for active general equity funds. In the calendar year to December 2014, funds that underperfomed the shareholder weighted index (Swix) — the index which most accurately reflects the universe into which these funds can invest — was close to 85%.

The average return of 10,3% was five percentage points below the Swix, according to Morningstar data. Fund returns varied from 24,7% for the Anchor Equity Fund to -15,9% for the worst fund (in 124th spot), the confusingly named Momentum Value Fund.

Just eight funds outperformed the 17,9% achieved by the Satrix Momentum Index Fund. This is constructed through a quantitative model on the basis that pricing behaviour, up or down, persists and that earnings revisions by analysts have a significant influence.

Value funds as a subgroup (which ignore these factors) were the worst performers with Cannon Equity, Stanlib Value, Element Earth Equity and Discovery Equity all in the bottom 10.

Discovery has thrown in the towel and its equity will no longer be managed as a deepvalue fund but as a more mainstream relative-value fund run by Investec quants manager Grant Irvine-Smith.

But some diehard true believers will carry on. Adrian Saville, CIO of Cannon Asset Managers, says though certain value shares, such as miners, bounced back in January, there has not been a convincing turn in sentiment. “Loved industrial shares such as Naspers and Aspen continue to hit ever more stratospheric p:e ratios.”