Unit trust performance is not only about skill. Sometimes, it is about having the right style with the right strategy at the right time.
The markets in 2002 turned out to be very different to 2001. While 2001 was the year for the rand hedges and the large cap, 2002 was characterised by a strong rand and the revival of the small- and mid-cap shares.
Only the most nimble of managers could hope to win the one-year awards for 2001 and 2002. There were just three repeat winners in their categories, Sanlam Financial, Coronation Top 20 and Investec Value.
In the two largest and most competitive sectors, general equity and prudential, SA's leading empowerment manager Oasis took the one-year awards for Oasis General Equity and Oasis Balanced. Oasis Crescent Management Company was the best smaller management company over one year.
Oasis fund manager Adam Ebrahim has maintained a strong holding in exporters, selected financials and consumer staples.
Oasis is a low-volatility manager, which helped it to win the general equity sector award for relative risk-adjusted performance over one year, though in the unadjusted figures it was third, with a 20,4% return behind Allan Gray Equity (24,2%) and Futuregrowth Albaraka Equity (22,8%).
Oasis Crescent, which is an ethical fund that does not invest in liquor, pornography or financials, was the winner in general equity over three years, with a 24,2% annualised return.
The awards continued to be dominated by Investec, Liberty, Coronation and RMB. FT NIB, which won three awards last year goes home empty-handed, as does Absa, which won two awards for 2001.
The two largest investment teams, Old Mutual and Sanlam, have just managed to win one sector award each. Sanlam Financial looks well placed to win the three-year award for its sector when it qualifies next year, after winning in both the 2001 and 2002 awards.
Old Mutual used to be able to rely on its Financial & Industrial fund to win it a trophy, but that category is now too small to qualify for an award.
But the Old Mutual Global Bond Fund of Funds was the comfortable winner of the foreign fixed-interest bond category, knocking out last year's winner, Absa US Dollar Bond. Old Mutual Gold was the top-performing fund of 2002, with a 69,96% after-costs return, but the fund is not eligible for a sector award because there are only two gold funds.
Qualifying for the first time this year is the foreign asset allocation flexible category. This meets the needs of investors who are nervous about international equity markets, but want the prospect of better returns than foreign fixed-interest funds offer. Standard Bank had two funds in this category and its International Conservative Fund of Funds was the winner.
The worldwide asset allocation flexible category qualified for a three-year sector award and the winner was Coronation Optimum Growth, which also won for one year.
The smaller companies category also qualified for a five-year sector award for the first time and Nedbank Entrepreneur won for both three and five years.
The most coveted trophies at the S&P Awards are the group awards, which assess management companies across the full range of their products.
For the first time S&P Fund Services and the FM are awarding a trophy for the best smaller management company over five years, which has been won by Nedcor Bank Management Co, which is responsible for two five-year winners Nedbank Managed and Nedbank Entrepreneur.
The three-year winner among the smaller management companies was Allan Gray, which must have been disappointed not to win more sector awards, as archrival Oasis dominated the general equity and prudential categories. Allan Gray Balanced, however, was the three-year winner in the prudential category.
In the larger management company category, the top three slots, in one year, three years and five years are occupied by Coronation, Liberty and Investec. Coronation was the best larger group over one year, Liberty over three.
And the three companies shared all the domestic income and bond sector awards. Liberty Income repeated last year's feat of winning the three- and five-year awards for income funds, but Investec High Income was the winner over one year.
Liberty Bond took the one-year bond trophy from Coronation Specialist Bond, but Coronation took the three-year top slot away from FT NIB Gilt.
For the third consecutive year, Investec has won the group trophy for five years. Its Investec Index fund was the top general equity fund over five years. Last year's five-year winner FT NIB Prime Select has had to cope with a 20% allocation to international equities. And Investec Gilt pushed out Sanlam GIlt to win the five-year sector award in the domestic bond category.
Liberty Resources, managed by Ian Woodley, was the only three-bagger fund - winning the sector awards for one, three and five years.
Investec Value fund manager John Biccard had little exposure to large-cap shares or to resources last year and now has a zero exposure to resources. Strong performing mid-cap companies such as AECI, Truworths and Reunert have been the backbone of the portfolio. For much of last year his focus was on exporters, which were undervalued relative to rand hedges, but 75% of the portfolio is now exposed to SA domestic companies.
In the growth category, RMB Strategic Opportunities has preserved its long-term record, winning both the three- and five-year sector awards.
Last year we commended the fund for moving away from overhyped growth shares and focusing on defensive shares that were able to grow earnings at an above-average rate. But in the past year it suffered from its high foreign-equity weighting, which was 25% at the beginning of the year.
Because of the local equity performance of the co-fund, says manager Royce Long, unit holders should benefit from the offshore diversification in the longer term. If the money had been repatriated, the fund would have run the risk of losing the asset-swap capacity indefinitely.
With RMB out of contention over one year, the surprise winner of the one-year award for the growth sector was Liberty Capital Focus.
Capital Focus was second to Investec Growth in straight performance tables, with a 0,62% return for the year, but it was top on the relative risk-adjusted numbers. Fund manager Richard Middleton says he screens shares using the peg ratio, which divides the p:e ratio by the prospective compound earnings growth over the next two years.
The portfolio has 60% of the portfolio, with a peg ratio of 0,5 or less (a share with 20% prospective earnings growth is trading on a p:e of 10).
There were not many places to hide in the large-cap sector, but Coronation Top 20 still comfortably outperformed its competitors, which are all tracker funds. The fund's 4,58% negative return might not sound encouraging but it still represents a 9,52% outperformance of the Alsi 40.
