Because of the strong equity market, most unit trust investors should be pleased with the returns that they have received since the trough of the market four years ago.
Even the average unit trust (taking all sectors into account) has provided 24,2% return over a year and 94,1% (that is, even if you had simply thrown a dart the chances are you have almost doubled your money).
WHAT IT MEANS
 Investec holds on to its five-year award
Hermes and 36One are best newcomers
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When the S&P Awards - for which the FM has been the SA media partner since 1999 - were presented four years ago they had a bitter sweet quality as many of the winners had lost money for their clients over the preceding year and many, particularly those which had international assets, over the previous three years. As if the dismal performance of the SA cricket team in the World Cup on home soil wasn't enough.
We debated whether it was appropriate to give awards to funds which lost money for their clients. But it is often in declining markets that fund manager skill can be best tested and demonstrated, even if that excellence still means a negative return in absolute terms.
In any case we were not in a position to rule that funds producing negative returns could not win awards. The S&P Awards operate on the same methodology throughout the world. Standard & Poor's Fund Services is still widely known by its original name Micropal and it is the leading data provider on the mutual fund industry, particularly in the UK and Europe. The awards have changed their name from Micropal to S&P Micropal to S&P.
There will soon be another change of brand. The business was recently sold to Morningstar the US-based data provider which is best known for its research into the investment styles of mutual funds and, arguably, it is passionate about the mutual fund/unit trust industry in the way that the much more diverse Standard & Poor's never could be.
From next year the awards will be known as the Morningstar awards and with a bit of luck that will be the last change.
But there has been no change in the way in which the awards are calculated. The Relative Risk Adjusted Return methodology favours funds which remain within mandate - funds with a high tracking error against the sector average will find it more difficult to win an award than funds with lower tracking errors.
In the RRA methodology you are rewarded for doing "exactly what it says on the tin". A possible criticism is that it favours the more conservative benchmark-hugging funds over those with unusual strategies.
In the one-year general equity category, for example, Sasfin Twenty Ten had the highest straight return. But it focused on a small part of the market, primarily construction, which made the fund more volatile than its peers. On a relative risk-adjusted basis the broader based Prudential Equity fund was the top performer.
Such an outcome will not please everybody. But nobody can argue that the process is not thorough. The highly quantitative RRA process is extremely intensive and looks at hundreds of data points. At times the process of calculating these awards can be frustratingly slow but investors can rest assured that it follows international best practice.
This year, the number of overall unadjusted performance awards increases from simply the one-year trophy to a three-year and five-year trophy: 360ne was the winner over one year, Nedbank Entrepreneur over three years and Investec Value over five years.
In the group awards, the big winner among the boutiques was Hermes, which won the smaller fund group category over one year. Hermes Equity was second in the equity category over one year, while Hermes Flexible was fourth in its category out of 34. Hermes was formed in 2004 after the closure of Quaystone asset management by Arthur Karas and Philip Thompson and the former group chairman of BoE Bill McAdam.
But in spite of all the talk of the rise of the boutiques the established managers still dominate the awards.
Investec has continued its phenomenal run. It has won quite comfortably against Coronation to take the large group award over five years. But over three years it was an extremely tight race, with Prudential just a hair's breadth behind.
John Green - Avoided faddish funds
Says John Green, MD of Investec Asset Management SA: "We decided to avoid faddish sector funds and only offer those funds in which we thought there would be sustainable demand and in which we could offer a competitive advantage."
Investec was the first of the large managers to go the multispecialist route and therefore the unit trust managers have felt a greater sense of "ownership" of their unit trusts for longer than their major competitors. Its main competitors such as Old Mutual, Stanlib and Sanlam have gone the same route. It is starting to bear fruit with the success of funds such as Sanlam Small Cap as well as Nedbank Growth which is run by Neil Brown, from the new Select Equity boutique at Old Mutual. In other cases boutiques have grown up to become large managers in their own right, Oasis and Foord, both group award winners, being good examples.
