The most expensive retail class of an eligible fund will be used when calculating performance for Profile Group’s new unit trust awards.
The supplier of financial data and investor information announced last month it will launch a new set of awards to recognise performance by actively managed collective investment schemes. This follows Profile’s decision to end its partnership with Personal Finance and the Raging Bull Awards.
Until this year, Profile’s subsidiaries, ProfileData and PlexCrown Fund Ratings, provided the data and performed the calculations used to determine the Raging Bull Awards and certificates.
Read: Profile to launch new unit trust award after ending relationship with Personal Finance
Profile released further information about the rules for its new awards this week.
The rules make it clear that only “purely” actively managed funds will be eligible – funds that are semi-active/semi-passive do not qualify.
As with the Raging Bull Awards, there will be awards for straight performance, measured over three years, and risk-adjusted performance over five years. This means funds must have a performance history of least three years to qualify for a straight performance award and of at least five years to qualify for a risk-adjusted award.
In addition, a fund must have been available to retail investors for at least one year to qualify for a straight performance award and for at least three years for a risk-adjusted award.
The Plexcrown methodology will be used to calculate performance for the risk-adjusted awards.
Awards will be allocated in each ASISA unit trust category where there are 20 or more qualifying funds. Funds in smaller categories will be grouped together by broad asset classes for “best of the rest” awards.
If an offshore fund has a rand-denominated feeder fund, the offshore fund will be excluded, to avoid potentially rewarding the same investment success twice.
An offshore fund must have been approved by the FSCA for at least three years to be eligible for an award. The fund’s historical data must be made available to Profile on the last working day of December in the year preceding the awards ceremony.
Funds that have changed categories during the past year (even if they have been allowed by ASISA to retain their performance history) are not eligible for awards. Money market funds and funds in ASISA’s “unclassified” sub-category are also not eligible.
Profile will use the highest Total Expense Ratio (TER) of a qualifying retail class fund when calculating performance.
The TER measures the direct costs involved in managing a unit trust. It shows the charges, levies, and fees relating to the management of the portfolio and is expressed as a percentage of the average net asset value of the portfolio, calculated for the year to the end of the most recently completed quarter.
If the class with the highest TER is closed to new investors but remains open to existing investors, then that class will be used.
Funds that have changed from institutional to retail class in the past year or the past three years will not be eligible for straight performance or risk-adjusted performance awards.
Profile said in a statement it is confident are appropriate given the current state of the unit trust industry in South Africa. However, it welcomes comments or criticism, which can be sent rules@profile.co.za.
Profile will apply the rules based on the status of funds and classes in its database as at mid-November 2024.
The final award categories will be based on the new ASISA categories that are due to come in October.
It is possible that the “main” awards will be for sectors that consist of at least 100 funds.
Earlier this month, Profile released its inaugural fund performance overview, Running of the Bulls, which spotlights funds leading in selected ASISA and offshore categories.
Ernie Alexander, the chairman of the Profile Group, the purpose of Running of the Bulls is to make the determination of the unit trust awards more transparent – the industry can see from quarter to quarter which funds are providing superior performance in terms of the awards’ methodology.
