The ups and downs

It is curious how often a unit trust with a boastful name gives disastrous returns. Investors would be well advised to steer clear of a fund claiming “the sun shines out of us”, or that it is “indestructible” or “top quality”. In a poor quarter on the JSE you would have been asking for trouble investing in the Absa Smart Alpha Equity Fund, which was down 11.2%. Even the Z class of the share — and who among the living would want the Z class — lost 10.9%.

Not so long ago there was a conspiracy of silence to suppress short-term numbers. It 2.4%. It’s the best of Nedgroup’s three equity funds, though all three funds (including Rainmaker and Value) materially outperformed the index.

Another strong performer was Clucasgray Equity, which fell 1.1% and is still 6.2% ahead over six months. Under Andrew Vintcent the house has built an interesting culture, drawing from the disciplines of good institutional fund management and the flexibility and small-cap passion of the private client managers who started the firm.

The only retail fund with a positive return, though just squeaking in at 0.2%, is Bridge Equity Income Growth. It promised a stable portfowas lio, and delivered, only to fight again another day.

I think it is only fair for me to congratulate Piet Viljoen and Jan van Niekerk at RECM for a 1.4% loss. I have criticised their investment style, which seems to lack urgency. But it is often in down markets that managers add outperformance or alpha. It is just hard to persuade clients that they have been done a favour as the manager lost less of their money than the index would have.

And talking of Viljoen, another elder statesmen of the business, Walter Aylett, had a good quarter, down just 1%. The question is whether you would invest in the Aylett Equity Fund, as he seems to be reaching the age when he will want to give it up for bowls and bingo.

Not so visionary

At the other end of the scale, the Fairtree Equity Fund insists on describing itself as “prescient”. Well, that prescience seems to have deserted it, as it lost 12.2% of its clients’ hard-earned money.

All that time swanning about in the Stellenbosch winelands on racing bikes can’t have helped.

Among the more serious fund managers, Foord has lost its mojo, with losses of 9.1% in the equity fund. Even my old friend Hlelo Giyose at First Avenue was pushing his luck when he named his equity fund “Focused Quality”. Might be time for an eye test, after a 9.7% loss.

Last year there was a strong revival of the Investec Value Fund, and at least the investors have got used to a feast-orfamine approach from its fund manager, John Biccard. So perhaps they will forgive the fund’s 14% loss in the quarter.

I am glad to be invested in Investec’s mainstream equity strategy under Chris Freund. I never enjoyed roller coasters and I had to put up with only a more modest 5% loss. I don’t want to be immunised from loss, but the loss must be within a reasonable risk budget.