Business 25.1.2018 09:43 am

SA’s top unit trusts over 10 years

Property funds came out tops, with the biggest star being the Absa Property Equity Fund. Picture: Shutterstock

Property funds came out tops, with the biggest star being the Absa Property Equity Fund. Picture: Shutterstock

Sector funds top the tables.

Local markets have been through a lot over the last ten years. It was a period that started with the global financial crisis in 2008, then saw the rand trading as low as R6.70 to the dollar in 2011 and as high as R16.85 in 2015, and ended with last year’s rally in both bonds and equities as investor confidence started to return after years of negative sentiment.

For many, this has been a period during which it has been very difficult to stay invested. Besides the ups and downs, there has been a general feeling of unease for some time about the sustainability of returns.

At the end of it, however, returns for local investors have been fairly good. As the table below shows, the JSE has not had a negative year since 2008, and in five of the last 10 years the market has been up 19.0% or more.

FTSE/JSE All Share Index total return
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-23.20% 32.10% 19.00% 2.60% 26.70% 21.40% 10.90% 5.10% 2.60% 21.00%

Source: FTSE Russell

Overall, the All Share Index showed an annualised return of 10.41% for the ten years to the end of December. That is below its long-term average, but still well ahead of inflation, which has averaged just above 6%.

The local bond market has also done reasonably well. The ten year annualised return on the FTSE/JSE All Bond Index was 8.62%.

The local asset class that has performed best, however, is listed real estate. The FTSE/JSE SA listed property index has returned an annualised 14.79%.

It is therefore not surprising that the list of top unit trusts over this period is dominated by property funds. This was also the case last year, when 11 of the top 20 funds over the ten year period to December 31 2016 were in the property sector.

For the ten years to the end of 2017, this has gone up to 13 out of the top 20. The table below shows the list of the 25 top performers over the past decade.

SA unit trust performance to December 31 2017
Fund 10 year annualised return
Absa Property Equity Fund A 17.75
Coronation Industrial Fund P 16.35
Discovery Flexible Property Fund 15.49
Ashburton Multi Manager Property Fund B1 15.2
STANLIB Property Income Fund B1 15.1
Catalyst SA Property Equity Prescient Fund A 14.94
Centaur BCI Flexible Fund A 14.88
Prudential Enhanced SA Property Tracker Fund A 14.8
SIM Industrial Fund R 14.75
Nedgroup Investments Financials Fund R 14.72
Coronation Property Equity Fund A 14.45
STANLIB MM Property Fund B1 14.29
Investec Property Equity Fund A 14.24
Allan Gray-Orbis Global Equity FF 13.89
PSG Flexible Fund 13.85
Prescient Property Equity Fund A1 13.43
Old Mutual Global Equity Fund R 13.42
Old Mutual SA Quoted Property Fund 13.35
Select BCI Property Fund A 13.31
Momentum Real Growth Property Fund A 13.3
Marriott Dividend Growth Fund R 13.28
Coronation Top 20 Fund A 12.99
Momentum Financials Fund A 12.92
Coronation Financial Fund A 12.91
Aylett Equity Prescient Fund A1 12.65

Source: Morningstar

The dominance of property funds is obvious, led by the incredible performance of the Absa Property Equity Fund. Over the last five years in particular, this offering has stood out in its category.

Apart from the property funds, a number of sector funds also make the list. Two industrial funds and three financial funds appear.

The industrial sector unit trusts have benefited most obviously from the rise of Naspers, in which they tend to carry more weight than general funds. They have however also enjoyed the strong performance of other rand hedge industrials like Richemont and British American Tobacco.

The more notable funds on the list, however, are those who haven’t been supported so strongly by the performance of their underlying sectors. This includes the two global equity funds – the Allan Gray-Orbis Global Equity Feeder Fund, and the Old Mutual Global Equity Fund – as well as the two flexible funds and three general equity funds.

The Centaur BCI Flexible Fund has been the most impressive, having delivered an outperformance relative to the FTSE/JSE All Share Index of nearly 4.5% per year over this period. That is an annualised real return of more than 8%.

The top general equity fund over this period was the Marriott Dividend Growth Fund. This is particularly interesting because the fund’s strategy prioritises investing in stocks that pay sustainable dividends.

This is a fairly conservative strategy, and its portfolio is essentially built on defensive counters like consumer goods companies, healthcare providers and insurers. Ordinarily one wouldn’t expect significant outperformance from these kinds of companies, but they have been in high demand in the years since the global financial crisis as investors have sought out their bond-like qualities in a period when interest rates have been so low.

Finally, it must be noted that this list only shows unit trusts, so the Satrix Indi and CoreShares Proptrax Sapy ETFs do not appear even though they would qualify. The Satrix Indi has shown an annualised return of 16.27%, and the CoreShares Proptrax 13.99%.

Brought to you by Moneyweb

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