2015: The winners and the losers

The Sprinters, The Pedestrians And The Tumblers
At Graviton, we believe that one year is too short to draw a meaningful conclusion on how a particular asset class or fund is performing. It is, however, still interesting to witness how different asset classes, and styles of investing, take turns to outperform one another from year to year. We have therefore summarised the main results of the past calendar year for you.
Foreign equity the top asset class
After four exceptional years in which all asset classes delivered positive returns for SA investors, 2015 carried in the first underdog in a while: SA bonds, which tumbled by 3.93% over the calendar year. The top performing asset class for 2015 was Foreign Equity (32.7%), with Foreign Bonds trailing only slightly behind at 30.4%.
Rand is 3^rd worst currency against dollar
Like several other commodity-exporting emerging market countries, SA and its currency have been hit by continued commodity price weakness throughout the year. The expectation of and eventual realisation of the Fed’s first interest rate hike since 2006 and China’s slowdown contributed further to the weakening of the rand.
How did SA unit trust investors fare?
Looking at the performance in the SA market in greater detail, it’s clear the year was dominated by the global ASISA categories, driven by the falling rand. Within the global grouping, Real Estate was the top-performing sector over the one-year period to end December 2015.
Looking at the South African equity categories, all posted positive returns for the year, except the Resources category, with Industrials finishing the year as the best performing within the category, followed by the Real Estate sector (which was the top performer for 2014 too).
The category that saw the most inflows in 2015, the Multi Asset category, saw its sub-categories Multi Asset High Equity, Low Equity and Medium Equity crossing the finishing line within a stride or two of one another.
Growth is still outrunning the Value style
The Value and Growth styles take turns to lead the investment pack, with each stage of their cycle normally lasting two to three years. Since September 2011, however, the MSCI SA Value Index has underperformed the MSCI SA Growth Index – the longest run of underperformance since 1997. 2015 saw a continuation of the underperformance of the Value style, a feature of the bull market during the time. The Growth and Momentum factors ended the year on top, maintaining their positions for 2014.
Who were the top performing funds?
In light of the currency depreciation of the rand, predictably, almost all of the top performing funds for 2015 are global equity funds, with a selection of flexible funds, property funds and one income fund. However, most of these funds delivered very little performance above that gained by currency movements. Looking at the performance of the funds in dollar terms further highlights this.
The below table lists the 15 top performing South African-domiciled unit trusts for the year to the end of December – both in rand and dollar terms:
We look forward to seeing who the long-term winners over the next few years will be. In the meantime, we recommend that clients stick to the type of investment most appropriate for their risk profile and investment goal. This year’s winners are often next year’s losers. In the end, it is endurance that matters.
 
DISCLOSURE
Although all reasonable steps have been taken to ensure the information in this document is accurate, Sanlam Investment Management (Pty) Ltd does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. This document is intended for information purposes only and the information in it does not constitute financial advice as contemplated in terms of the FAIS Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision.
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Sanlam Investment Management (Proprietary) Limited is a Licensed Financial Services Provider. Sanlam is a full member of ASISA. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments / collective investment units / unit trusts may go down as well as up. Commission may be paid and, if so, would be included with the brokerage charges, securities transfer tax, auditor’s fees, bank charges, trustee fees and levies in the overall costs, which will be levied against the fund. A schedule of fees and charges and maximum commissions is available from the manager, Sanlam Collective Investments (RF) Pty Ltd. Collective investment schemes are generally medium- to long-term investments.  Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income accrual and less any permissible deductions from the portfolio. Portfolio performance is calculated on a NAV to NAV basis and does not take any initial fees into account. An annualised growth rate is used for all performance data of 12 months or longer. Income is reinvested on the ex-dividend date. Total return performances are published. The source of performance data and risk statistics is Morningstar. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Forward pricing is used.