Eight native unit trusts that caught our eye this 12 months
This 12 months has been an especially good one for native fund managers. Of the 1 207 South African unit trusts listed on Morningstar, simply six have delivered a damaging return for the 12 months to the tip of November.
This universe excludes cash market funds.
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It has additionally been a 12 months of great reversals. Of the ten top-performing funds to date this 12 months, simply two delivered a constructive return in 2020.
Whereas final 12 months’s efficiency tables had been dominated by international fairness funds, and progress funds particularly, 2021 has been a 12 months for native worth managers, property managers, and people managers ready and in a position to search for alternatives within the mid and small cap sectors of the JSE. Largely, these had been methods that had a troublesome time final 12 months.
Highlighting the efficiency of any unit belief over a interval as quick as 11 months is, in fact, fraught. However it’s however worthwhile to look at what drove their returns.
This isn’t to attract any conclusions about their potential future efficiency, however merely to understand what approaches the market rewarded this 12 months.
The Blue Quadrant Worldwide Versatile Prescient fund loved a exceptional turnaround in 2021.
Final 12 months, it was one of many small minority of native funds that recorded a damaging annual return. It was down 0.9% in a 12 months when 84% of South African unit trusts (excluding cash market funds) made positive factors.
For the 12 months to the tip of November 2021, nonetheless, it confirmed a return of 126.7%. That is greater than twice the achieve of the subsequent greatest South African fund over this era.
As supervisor Leandro Gastaldi defined to Citywire South Africa earlier this 12 months, this reversal has largely been fuelled by the efficiency of vitality shares within the portfolio. These have been a affluent searching floor for his deep worth method as these bombed out counters have rallied within the post-Covid restoration.
The highest-performing South African fairness fund this 12 months has been an index tracker.
The 1nvest Sector Impartial Worth Index fund was up 54.1% for the primary 11 months of 2021. The fund offers publicity to the shares displaying the best worth traits on the JSE, and benefitted from the reawakening of the worth issue this 12 months.
Its newest truth sheet reveals that it presently holds a wholesome slug of mining counters like Sibanye-Stillwater, AngloGold Ashanti, Gold Fields and Royal Bafokeng Platinum. Its largest publicity is nonetheless a 17% weighting in Richemont.
One other fund supervisor using the worth resurgence has been Flagship’s Niall Brown. The Flagship IP Versatile Worth fund he manages has topped the efficiency rankings amongst South African versatile funds, returning 51.1% for the 12 months to the tip of November.
This fund was one other of final 12 months’s strugglers, having misplaced 2.6% over 2020. As Brown instructed Citywire South Africa earlier this 12 months, he discovered himself holding low cost shares that simply ‘carried on getting cheaper’.
This 12 months, nonetheless, his persistence was rewarded. Holding shares like Nampak, York Timbers, Caxton and Stellar Capital has meant that the fund has benefitted as breadth returned to the JSE.
|Counterpoint SCI International Property Earnings fund
Fund managers: Richard Henwood and Ian Anderson
Native property funds have been an apparent turnaround story this 12 months, however there have additionally been some huge reversals for international property portfolios.
The Counterpoint SCI International Property Earnings fund is each the top-performing international fund and the top-performing property fund in South Africa for the 12 months to the tip of November. After dropping 17.4% in 2020, it gained 42.9% for the 11 months to the tip of November.
Managers Ian Anderson and Richard Henwood have positioned the fund largely within the residential, retail and logistics sectors, and have realised returns from the reopening commerce.
South Africa’s top-performing energetic fairness fund this 12 months is the technique managed by worth veteran John Biccard.
The Ninety One Worth fund is one other of these unit trusts that struggled final 12 months, dropping 7% in 2020. Nonetheless, it gained 41% for the 12 months to the tip of November.
Citywire A-rated Biccard has been a giant holder of gold miners, however the largest publicity within the fund in the mean time is to Royal Bafokeng Platinum. Murray & Roberts is second largest, at 9%.
Biccard additionally believes that an surroundings of upper inflation will proceed to learn worth shares. As he wrote for Citywire South Africa earlier this 12 months:
“Worth shares are low cost, uncorrelated with different elements and, if the world is heading for even a average sustained reflation, worth shares will certainly do properly and supply some much-needed diversification.”
Counterpoint’s property specialist Ian Anderson not solely manages the top-performing international property fund of 2021 to date, but additionally the 12 months’s top-performing native property portfolio.
The Nedgroup Investments Property fund he manages is up 39% for the 11 months to the tip of November, after a fall of 29.6% final 12 months.
Anderson has constructed a portfolio that appears distinctly completely different to the index, with the biggest positions being in Fairvest, Tower and Dipula. The sector’s three largest shares – Nepi-Rockcastle, Growthpoint and Redefine – don’t even function within the fund’s high 10.
|1nvest S&P500 Information Tech Index feeder fund
Fund managers: Ryan Basdeo and Citywire A-rated Rademeyer Vermaak
The second index fund that stood out this 12 months is one other 1nvest technique. It is usually one of many few portfolios that has carried out strongly throughout each 2020 and 2021.
Following a 48.3% achieve in 2020, the 1nvest S&P500 Information Tech Index feeder fund gained 38.9% for the 12 months to the tip of November.
The fund feeds into the iShares S&P 500 Data Expertise Sector Ucits ETF, and supplied publicity to info expertise shares within the US. Its largest holdings are Apple, Microsoft, Nvidia, Visa and PayPal.
It’s, nonetheless, a extremely concentrated portfolio in the mean time. Almost 40% of the fund is presently held in simply its two largest positions.
Within the present surroundings, it may be shocking that the top-performing South African multi-asset excessive fairness fund to date this 12 months is sitting with a big portion of its portfolio in money and little or no in native bonds.
Many native multi-asset portfolios have taken benefit of excessive South African bond yields prior to now 12 months, and shied away from the poor returns out there from money. Nonetheless the supervisor of the Aylet Balanced Prescient fund, Walter Aylett, instructed Citywire South Africa earlier this 12 months that he doesn’t suppose that native bond yields are excessive sufficient to justify the danger, and that the specter of a market correction makes the optionality of money enticing.
He has most popular to search for returns from low cost native equities, and worldwide sectors like vitality which were displaying worth.
The end result has been a 35.1% return for the 12 months to the tip of November.
Patrick Cairns is South Africa Editor at Citywire, which gives perception and knowledge for processional buyers globally.
This text was first printed on Citywire South Africa right here, and republished with permission.