“What are the top performing investment funds in South Africa?” I often get asked. The answer depends on the time horizon. Over the last three years, the Ninety One Commodity Fund takes pole position among the 263 Rand-dominated funds in South Africa.
How has it performed over the last year, the year of the pandemic? Not too bad if you look at the tables below.
Disclaimer: Investment advice is regulated in South Africa. This article captures my observations. You must consult with me on an official basis as your Financial Planner before acting on any information presented in this article. I will assess your appetite for taking risks, assess your financial needs, your overall financial position and make recommendations accordingly. Book your appointment with me by clicking here.
Top performing funds over the last 3 years:
| Ninety One Commodity Fund | 185.97% | SA Equities(97%) |
| IP Global Momentum Equity Fund | 185.75% | Foreign Equities(98%) |
| Sygnia Itrix 4th Ind Revolution Global Equity ETF | 180.86% | Foreign Equities(100%) |
| SIM Resources Fund | 174.73% | SA Equities(85%) |
| Sygnia 4th Industrial Revolution Global Equity Fund | 164.11% | Foreign Equities(100%) |
| Coronation Resources Fund | 161.17% | SA Equities(100%) |
Top performing funds over the last year:
| Fund Name | Perf(%) |
| Coronation Resources Fund | 151.48% |
| Nedgroup Investments Mining & Resource Fund | 124.62% |
| Sygnia Itrix 4th Industrial Revolution Global Equity ETF | 113.14% |
| SIM Resources Fund | 108.92% |
| Ninety One Commodity Fund | 108.64% |
| Sygnia 4th Industrial Revolution Global Equity Fund | 100.27% |
The main observations
Firstly, we expect foreign equities to outperform South African equities. However, from the top 17 performing funds over the last three years, only 10 were invested in pure foreign equities. Investing in South African equities, especially commodity linked equities, was a good move.
Secondly, they are all heavily weighted in equities – no bonds, no property and minimum cash.
Thirdly, the performance is driven mainly by commodities in SA Inc and tech stocks in the foreign funds.
I noticed that Allan Gray is missing from the top 50. What happened to this darling investment company? Beats me. However, this is telling. The heroes of yesterday are not guaranteed success in the future. That is why you pay Financial Planners such as myself to watch the scoreboard and make changes to your portfolio.
Finally, Sygnia is highly noticeable. It has 5 funds in the top 20 over the last 3 years, 2 of which have been top performers over the last 12 months and over the last 6 months too. This is incredible performance! More importantly, Sygnia has an ETF featuring in the top 3 over the last 3 years. This means that not only was performance excellent but costs were far lower than competitors. The result? Ecstatic clients.
Sygnia’s Magda Wierzycka (CEO) has introduced disruptive change in the investment sector in South Africa by making investments simpler, accessible and with lower costs. Consequently, this company has been very successful.
Top performing retirement funds
Regulation 28 prevents you from investing retirement money in the top performing funds listed above. All them are more than 75% equities. Regulation 28 allows a maximum of 75% of your retirement portfolio in equities. This was intended to minimize risk exposure, resulting in protection. However, the cost of Reg 28 is lower returns.
What follows are the top 23 medium to low equity funds ranked in NAV from highest to lowest. Allan Gray, PSG, Liberty and PPS do not feature .
Gosh! Syngia features prominently again!
Discovery ranks at a respectable 8th and 23rd position. Impressive for a medical aid+insurance+lifestyle and now banking company!
| Fund Name | Sector |
| Montrose BCI Moderate Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Montrose BCI Cautious Fund of Funds Class A | South African–Multi Asset–Low Equity |
| NewFunds, ETF | South African–Multi Asset–Low Equity |
| Kagiso Protector Fund Class A | South African–Multi Asset–Medium Equity |
| Select BCI Cautious Fund Class A | South African–Multi Asset–Low Equity |
| Southern Charter BCI Balanced Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Platinum BCI Balanced Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Discovery Moderate Dynamic Asset Optimiser Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| ADB BCI Balanced Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Multi Asset IP Balanced Fund Class B1 | South African–Multi Asset–Medium Equity |
| Old Mutual Multi-Managers Defensive Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Kagiso Stable Fund Class A | South African–Multi Asset–Low Equity |
| Sygnia CPI + 4% Fund Class D | South African–Multi Asset–Medium Equity |
| Sygnia CPI + 4% Fund Class A | South African–Multi Asset–Medium Equity |
| Sygnia CPI + 4% Fund Class B | South African–Multi Asset–Medium Equity |
| Melville Douglas STANLIB Medium Equity Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| FG IP Saturn Flexible Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Foord Conservative Fund Class B2 | South African–Multi Asset–Medium Equity |
| Foord Conservative Fund Class A | South African–Multi Asset–Medium Equity |
| Foster BCI Moderate Fund of Funds Class A | South African–Multi Asset–Medium Equity |
| Sygnia Skeleton Balanced 60 Fund Class A | South African–Multi Asset–Medium Equity |
| Aeon Balanced Prescient Fund Class A1 | South African–Multi Asset–Medium Equity |
| Discovery Moderate Balanced Fund Class A | South African–Multi Asset–Medium Equity |
Predicting the performance of investment funds
An investment decision naturally lends itself to making an assumption about future performance. If you are not happy with this concept – do yourself a favour: do not invest in stocks, bonds, property an alternate investments. If you are okay with the concept then know this – predicting the future comes with the real risk of being wrong. You need to be able to live with making an incorrect call, and believe me, this will happen sometimes. Guaranteed.
When you do invest, you have to inadvertently make that call – “buy, hold or sell?” Financial experts that linger within corporate offices, will tell you “do not time the market, stay invested.” How much of that is taking care of their own interest rather than taking care of your’s?
I know many family members and friends who retired just after a market crash. The signs to move to cash prior to retirement were blatant. Their institutionalized investment advisors told them to stay invested. Many of these retirees live a sub optimal retired life and will never recover from the loss.
Long-term investment strategies are no longer relevant. You can not keep monies invested and not review the portfolio as frequently as you would monitor a short-term investment. Just on that alone, I reject the notion of long term investment strategies encapsulated in “…stay invested.” Don’t be the ostrich sticking its head in the sand thinking “The markets can only go up!”
We need to follow the data. Technology has gifted us with Machine learning. Data Scientists are crunching big data. You need to follow the fresh new trends or at least have by your side a Financial Planner that is following the investment trends. Such Planners are accessible via Virtual Adviser.
Timing the markets is an important skill to have. A skill that is also very rare. The world achieves this via group consensus. In the past massive investment fund leaders got together and decided how to move the market. These days, powerful social media groups are formed to move markets. Reddit groups and Tweets have been very powerful in making markets moves over the last year. Are you following them?
John Maynard Keynes, a brilliant economist, once said ” When the facts change, I change my mind. What do you do, sir?”
Will the great performance of South African equities continue?
South Africa’s economy was hit hard by Covid-19. Unemployment is at a record high and a third wave of the pandemic is set to happen this June/July, as we enter winter. But there are also other factors to consider.
With low interest rates for cash investments, investors are lured into equities. A demand for equities will continue pushing its price up. The pricing phenomenon is real and is fueling stock markets globally. The world economy is under a great experiment in the guise of quantitative easing. There is a real risk of rising and uncontrolled inflation that threatens to end this bull run.
This inflation risk has ironically fueled Bitcoin, now at a record $60K (14/03/2021). Bitcoin is easing in seamlessly into mainstream finance but still remains highly speculative.
Did you know that Virtual Adviser offers financial planning advice for blockchain and cryptocurrency related assets? Our team of experts is led by Zurich based Rahul Singh, a global leader in all things blockchain and crypto related.
Book your appointment today by clicking here.
The latest issue of the JSE Quarterly invites us to join the Bull run – central bankers will do everything to ensure that markets do not crash – enjoy the wild ride. However, there are few more trends to be aware of.
Kabous le Roux did a great job highlighting the other trends in Cape Talk recently. I summarize them below.
Trend 1: Day traders
One of the major trends driving global financial markets has been the emergence of the day trader. A day trader is a retail investor and makes up 20% of trade in the US equities market. Google “Day Trading platforms in South Africa” and make your pick. These platforms have also opened low-cost offshore investment opportunities in places such as the US and Australia.
“In the past, listed corporates have focused on the institutional investor market but with the day trader now becoming far more influential, corporates are having to change the way they share their investment proposition. Investors are now far more digitally savvy, and management needs to take advantage of different tools and platforms to communicate with this new generation of investors.”
Trend 2: Active “Passive” is now mainstream
“Low-cost exchange-traded and index-tracking products are rapidly evolving and innovating and one of the trends we are watching is the new generation “Active” Exchange Traded Products (ETPs)” writes Kabous.
“These new-generation products make use of management teams who take a more active role in the investment strategy and asset allocation while placing their investments inside of tax-efficient products with high levels of price transparency.
Investors can get access to niche asset allocation including crypto-currency, fixed income and specialist equity strategies while making use of low-cost ETPs.
Research from etfgi.com shows that these products have attracted record inflows with $228.4bn now invested in these products at the end of the third quarter of 2020. The Fixed Income space in particular has enjoyed significant inflows as investors look to diversify their investment portfolios.”
If you have been following this article carefully, you will notice that Sygnia was mentioned several times. This is exactly the space that Sygnia is operating in and they are cleaning out the competition.
Trend 3: The hunt for yield is real – and South Africa Inc offers opportunities
” For experienced market participants, the last 10 years on the JSE have left much to be desired when it comes to investment returns. Once the darling of emerging markets and for many years one of the best performing exchanges in the world, the bourse has been a disappointment for many investors. We think this might be changing. ” writes Kabous.
I proved that this is happening over the last 3 years, with data, earlier in this article. Furthermore, I agree with Kabous on the following:
“As the world starts to adjust to a new investment landscape, we believe that South Africa has a number of positives which investors are potentially ignoring:
- The JSE still has a number of high-quality businesses with long, well-established trading histories, experienced and respected management teams and track records of paying dividends. We are particularly excited about the prospects for industrial businesses which are trading on undemanding multiples and remain cash generative.
- Telecoms businesses listed on the JSE, including Vodacom and MTN, are attractively priced and trading at between 10 and 12 times forward earnings while offering 5 – 6% dividend yields. Despite the impact of the COVID-19 pandemic, Vodacom was able to increase its dividend by 9.2%, boosted by its Safaricom investment and both telcos enjoy access to the growing African market
- The consumer sector has been under pressure and may be for a little while longer, but it has potential for growth as recent third-quarter sales figures out of retailer Mr Price demonstrate and the share has rebounded 22% since the start of November while banking groups including Absa are trading at significant discounts to book value
- As an equities team, we are heartened by some of the recent developments in the market. The Rand has strengthened in recent weeks and looks set to end the year at under R16 to the US dollar and we see this as a significant vote of confidence in the country and its financial markets. “
Final Words
I asked the question “What are the top performing investment funds in South Africa?” It turns out that SA equities have done really well over the last three years.
Will it continue its excellence?
2020 has taught us that there are no easy predictions to be made. There are encouraging signs that South African equities will continue delivering excellence.
I remain optimistic in SA Inc. Do you share my optimism?
Thank you for the informative article Mr Jairam. There does seem to be such polarizing investment options available. Reward and risk must be considered as equally important for investors, and always seek advice before investing in something “too good to be true”.