Prudential retains top position
Having shown consistency over a wider canvas, the group continues to impress with its equity funds
Morningstar gives two group awards, the larger group award for those with at least 10 eligible funds, and the smaller group for those with between three and nine funds.
But Prudential showed consistency over a wider canvas, its flagship fund being Prudential Inflation Plus with R38bn under management.
Prudential unashamedly used tactical asset allocation at a time when many dismissed it as mere market timing. Its two general equity funds remain highly competitive and it has a successful Enhanced Property Index Fund.
According to chief investment officer David Knee, the fund range was well placed for the rally in asset prices in the second half of the year. Prudential recently went through a transition, as the former CEO Marc Beckenstrater relocated to the group’s London office where MD Bernard Fick says he will run a revamped range of offshore funds tailored to the asset management needs of SA clients.
Second-placed PSG Asset Management always had a talented investment team but it is only since CEO Anet Ahern and chief investment officer Greg Hopkins brought a more outward looking approach to the company that it grew from a boutique to a solid second-tier company.
Second tier in size that is, as it is clearly first tier in investment skills. Hopkins says PSG prefers the less crowded asset classes and it has recently reaped a harvest in sectors such as long bonds, cash and distressed equities, particularly domestically focused shares.
The Stable and Balanced funds were both nominated this year.
Nedgroup Investments in third place was started from the merger of five unit trust companies. But instead of building up an in-house investment team it hit on a winning formula known as best-of-breed. The manager selection has been good and the turnover low.
Long-running relationships include Abax’s stewardship of the Rainmaker and Entrepreneur Fund and Taquanta’s role on the fixed income fund.
In the smaller fund category, what can be said about Allan Gray? The more it changes the more it remains the same. In recent years Delphine Govender and Ian Liddle have left the investment team, and the portion of the assets they managed was reallocated to up and coming portfolio managers, with Andrew Lapping as the new CIO.
Head of retail distribution Tamryn Lamb says there is no intention to increase the unit trust range. The gap could be in the income fund area, but she says the group already has two options in the field, the Bond Fund and the Optimal Fund, which aims for bond-like returns using hedged equities.
A newcomer to the finals is Pinebridge, which started life as the investment arm of the global insurer AIG. After AIG nearly collapsed in the 2008 global financial crisis, Pinebridge was given its independece in 2010. More than half of its clients are based in Asia and just 12% in the Europe, Middle East and Africa region. With Us$89bn, or more than R1 trillion, it hardly belongs in the small category. In SA it has registered some interesting funds such as the Asia ex-japan Small Cap Equity Fund, Global Focus Equity, the US Large Cap Research Enhanced Fund, the Europe Equity Fund and the Global Dynamic Asset Allocation Fund
Third placed Dodge & Cox, based in San Francisco, might have Us$270bn under management but it has a highly concentrated range of funds, with a Global Stock Fund, a US Stock Fund, an International (ex-us) Stock Fund and a Global Bond Fund.
It has been a genuinely independent manager, with no ties to banks or insurers for 80 years. Many fund managers pay lip service to the old-fashioned Dodge & Cox philosophy: a long-term investment horizon, a fundamental approach to stock selection and portfolio diversification — but Dodge & Cox lives by them, and its entire investment team sits in the same office on the US West Coast. At times the philosophy can be painful as it often differs from the herd. The key question is “how would we invest an all-cash portfolio today if it could not be traded for the next five years?”
Over 20 years Dodge & Cox flagship US Domestic Fund has outperformed the S&P 500 index by 2.35%/year.