INVESTMENT INSIGHTS
Author: Patrick Cairns|
19 February 2013 10:34
From: http://www.moneyweb.co.za/moneyweb-investment-insights/
The top performers over five, ten and fifteen years.
ORAPA – The last decade and a half has seen more than its share of market turmoil. Over this time we've seen the dot-com bubble, 9-11, the Chinese stock bubble of 2007, the financial crisis, a global recession and the sovereign debt crisis in Europe.
And yet, local equity investors have come out of it all pretty okay.
Between January 1 1998 and December 31 2012, the FTSE/JSE Shareholders Weighted All Share Index produced annualised growth of 15.6%. This is well above inflation, which averaged around 6.5% for that period.
Of course, not all local unit trusts made the most of this situation. But for the stars of this space, it's been a good ride.
Taking the view that unit trusts should be long-term investments, we have looked at the top-performing domestic equity and real estate funds over the last five, ten and fifteen years. What we found may surprise you.
Five years
Over the last 60 months, property has been the undisputed king of the JSE, and that shows in the figures. Eleven of the best 15 performers over this time have been real estate funds.
While all of these property funds have been an outstanding investments relative to other unit trusts, it is nevertheless worth noting that only two of them actually out-performed the FTSE/JSE SA Listed Property Index. Annualised, the index was up 15.89% over this period.
The Marriot Dividend Growth Fund was comfortably the best general equity fund over this time-frame. The next best was the Foord Equity Fund, which produced an annualised return of 12.90%. By comparison, the FTSE/JSE Shareholders Weighted All Share Index was up 10.60%.
Amongst the large cap funds, the Coronation Top 20 Fund completely outpaced the Absa Rand Protector Fund, which gave an annualised return of 10.55%. Both funds were, however, well above the 8.80% of the FTSE/JSE Top 40 Index.
After the Coronation and Stanlib Industrial Funds, the next best in the Industrials category was the SIM Industrial Fund. It delivered an annualised return of 12.68%. None of these funds, however beat the 16.50% of the FTSE/JSE Indi 25.
Ten years
The range of unit trusts that delivered leading performances over the last ten years is the most diverse in this analysis. Small cap funds make their mark here, with the two best funds both coming from this category and four in total making it into the top 15.
The list also includes four industrial funds, three real estate funds, two value funds, one large cap fund and one general equity fund.
The smaller companies funds have gained from having a much stronger universe of stocks to choose from in recent years and that has been one of the primary reasons for their good showing. As the quality of these companies has improved, so they have delivered the higher growth one would like to see from them.
It hasn't all been rosy for small cap funds though. While the above funds have glittered, the Stanlib Small Cap Fund was the third worst performing fund in the country over the same period.
In terms of the industrials, the Stanlib and Coronation Industrial Funds are again top of their sector here, and this time both marginally out-performed the index. The FTSE/JSE Indi 25 delivered 24.40% over this period. The performances of the Old Mutual Industrial Fund and Momentum Industrial Fund, while excellent relative to other unit trusts, came in below the index.
Again, the Coronation Top 20 Fund beat its benchmark index over this period. Annualised, the FTSE/JSE Top 40 was up 18.10%. It's also worth noting that this fund beat every general equity fund over this time frame.
Fifteen years
This is where we find perhaps the biggest surprise: although resource stocks and consequently resource funds have performed horribly over the last few years, the five best funds over the last decade and a half are all resource funds.
This is despite the fact that all five of these are in the bottom 20 funds over the last five years. The Stanlib Resources Fund, which is fourth on this list, has even delivered a negative return since 2008.
While it should be taken into account that only 38 domestic equity unit trusts have been around for this long and therefore the competitive universe is much smaller, these resource funds have nevertheless been outstanding. Every one of them has delivered annualised returns greater than 21.00%.
Source: Moneymate & moneyweb
Coming in directly after the resource funds there is one small cap fund and two value funds. It is worth noting that although value funds will now be classified as general equity funds, value investing is still a philosophy that investors may want to seek out. The Nedgroup Investments and Investec Value Funds have out-performed every general equity fund over this fifteen year period.
One of the most interesting funds on this list is the only real estate fund that appears – the Marriot Property Equity Fund. What is fascinating is that this fund is the worst performer in the real estate category over the last five years, where it has delivered an annualised return of just 7.83%. However, it's standard deviation over the last fifteen years of 10.44% is comfortably the lowest of any domestic equity or real estate fund in the country.
The Kagiso Top 40 Tracker Fund is another worth highlighting because it was one of the first index trackers in the country, pre-dating the establishment of exchange traded funds on the JSE. It slots into 14th place on this list, meaning that early adopters of the index tracking philosophy in South Africa would have beaten 63% of all managed funds over this period.
Interestingly, not a single fund appears in the top 15 over all three time frames. The closest is the Stanlib Industrial Fund, which is 15th over five years, third over 10 years, and 20th over 15 years.
The overall picture
Of the 38 funds that have been around for the full 15 years, 16 beat the FTSE/JSE Shareholders Weighted All Share Index. In other words, 42.1%. Over ten years, this figure decreases to just 31.3%, and over five years slips even further to 28.6%.
Expressed another way, the average (median) annualised return of domestic equity and real estate funds over the last five years is 8.22%. Over ten years it is 18.84% and over fifteen years 15.40%. In all three cases, the FTSE/JSE Shareholders Weighted All Share Index comes in higher – 10.6%, 20.1% and 15.6%.
For more, visit Moneyweb's Click-a-unit trust/ETF.
Topics: unit trusts, long-term investment, domestic equity, real estate
Author: Patrick Cairns|
19 February 2013 10:34
From: http://www.moneyweb.co.za/moneyweb-investment-insights/
