PlexCrown: Coronation edges towards top investment manager, Allan Gray

The race for the Raging Bull Management Company of the Year title is on. Although Allan Gray continued its remarkable reign as the top domestic investment management company for the 16th consecutive quarter in September, Coronation has significantly close

Ryk de Klerk, executive director of PlexCrown, says Coronation’s overall rating improved from 3.625 PlexCrowns at the end of last year to 4.021 while Allan Gray’s rating declined to 4.125 from 4.500 (see Table 1). Despite an improvement in its domestic equity rating since the end of 2011, Allan Gray’s overall rating was diluted by weaker ratings in domestic fixed interest, domestic asset allocation and its foreign component. The improvement in Coronation’s overall rating was evident across the board except in domestic asset allocation where its rating was slightly eroded.

Coronation’s competitiveness index, which measures the relative performance of all the investment house’s funds against its peer groups, has gained steadily since the 2008/2009 global financial crisis. Allan Gray’s competitiveness index has remained unchanged after surging during the 2008/2009 crisis. (See graph 1.)

A significant gap has opened up between second and third spot in the rankings of the top managers. Although Prudential edged out Nedgroup Investments for third spot with a rating of 3.625 PlexCrowns, a significant gap has opened between the top two and the rest of the investment houses.

The past quarter was characterised by a ‘risk on’ approach by global and domestic investors alike despite continued concerns regarding the global economic outlook and the unrest in South Africa’s mining industry. For local investors, the JSE as measured by the JSE All Share Index returned 7,3% with dividends reinvested as the weaker rand supported dual-listed foreign equity prices, taking the total return for the past 12 months to 24,4% with dividends reinvested.

The market’s overall returns were again diluted by a relatively weak showing of the JSE Resources Index, which returned 2,9% with dividends reinvested for the quarter. The platinum counters weighed heavily on this sector, with the JSE Platinum Index returning -3,4% for the quarter and -19,2% for the 12 months. Non-mining stocks had an excellent quarter.

The JSE Listed Property Index again led the way with 11,0% with interest and dividends reinvested, while the JSE Industrial and JSE Financial indices returned 6,6% and 6,5% respectively.

The ‘risk on’ strategies resulted in equity funds dominating the top of the return table for the September quarter. Share selection was the name of the game in the quarter.

Most of the funds (82%) in the General Equity subcategory underachieved in comparison to the FTSE/JSE All Share Index, while two funds cost its investors by producing negative returns.

Despite being a hybrid between bonds and equities, Domestic Real Estate General was the best-performing domestic subcategory in the quarter with a total return of 9,47% with income distributions reinvested and best overall over 12 months with 32,88%. Domestic Real Estate General was also the leading subcategory over three and five years with returns of 20,71% and 12,93% per year respectively with income distributions reinvested.

Table 1: PlexCrown domestic CIS manager ranking – overall

Source: www.plexcrown.com

Graph 1
 (click on image to enlarge)

Source: www.plexcrown.com