Allan Gray was the top manager of actively managed South African unit trust funds in the quarter to September 30, according to two surveys that use different methodologies.
Allan Gray retained its position as the leading manager in the PlexCrown survey, while it ousted Foord from first place in the Morningstar ratings.
The PlexCrown survey is conducted quarterly and is used to determine the winners of the annual Raging Bull Awards. It rates collective investment schemes and scheme managers based on the risk-adjusted returns of their funds.
The fund ratings take into account consistency of performance and the risk a fund manager takes when investing, with managers scoring higher for good returns at low risk. Funds are rated from one to five PlexCrowns.
Managers such as Foord and Truffle are ranked in the PlexCrown ratings in the sectors in which they participate, but do not qualify for an overall rating for the management company rankings because they do not have a fund in each sector.
Six of Allan Gray’s eight funds that qualify to be included in the PlexCrown rating system obtained an above-average rating of four or more PlexCrowns.
PSG jumped from seventh in the second quarter to second place. Ryk de Klerk, an executive director of PlexCrown Fund Ratings, says this was largely a result of a decision to use the performances of the “clean” classes of PSG Wealth’s funds.
The prices of some A-class funds include an annual fee paid to a financial adviser, and are not “clean”, and the funds are at a disadvantage when returns and ratings are calculated. As a result, De Klerk says, a rule of the PlexCrown rating system has been amended so that, if an advice fee paid to a financial adviser is included in the pricing of an A-class fund the following applies:
• If the A-class fund is the only class available to retail investors, the A-class fund’s returns will be used; and
• If another class that does not include fees paid to advisers is available to retail investors (the pricing is “clean”), the returns of the “clean” class fund will be used, provided the fund has a performance history of at least five years. If it does not, the returns of the A-class fund will be used.
Ten of PSG’s 15 qualifying funds had above-average ratings of four or more PlexCrowns.
Nedgroup Investments slipped from second to third place. Thirteen of Nedgroup Investments’s 20 rated funds had above-average ratings.
The Morningstar ratings of asset managers were introduced in the second quarter.
Morningstar, a United States-based ratings agency, assigns funds a rating of between one and five, based on risk-adjusted returns over three, five and 10 years, weighted in favour of the longer periods. Certain funds, such as money market funds and those with short track records, are not rated.
Morningstar uses its individual fund ratings to determine two different aggregate ratings for South African managers. It calculates an overall-weighted rating and an asset-weighted rating for each qualifying manager and ranks them accordingly. The overall-weighted rating is a simple average of the managers’ individual fund ratings. The asset-weighted average is determined by weighting the fund ratings according to the amount of money invested in each fund.
Managers must have at least R5 billion in assets under management and at least three funds for retail investors with Morningstar ratings to be included in the survey.
Morningstar weights the funds’ ratings according to assets under management. It does not have any sector weightings.