Slightly more than half of local equity managers outperformed the S&P South Africa Domestic Shareholder Weighted Capped Index during the first six months of this year. This is according to the SPIVA Scorecard to June, published by S&P Global.
However, over the same period, only 40% of actively managed funds beat the S&P South Africa 50 Index, which consists of the largest 50 companies by float-adjusted market cap from the S&P South Africa Composite.
The S&P SA DSW Capped Index modifies the S&P SA DSW Index to ensure that no single stock weighs more than 10% of the index at each rebalancing. The S&P SA DSW Index adjusts the weights of companies in the S&P SA Composite to reflect the level of ownership by South African investors.
As Table 1 below shows, over one year to June, no active manager outperformed either the S&P SA DSW Capped Index or the S&P SA 50 Index on a total return basis over one, three or five years. Active manager underperformance was particularly marked over the longer term.
But most active managers outperformed both indices on a risk-adjusted basis over the year to June, as the second table shows. Some 53% of active managers also outperformed the SA DSW Capped Index over three years on a risk-adjusted basis.
Average performance
The average performance of local equity funds was better than the S&P SA DSW Capped Index across all periods on both an equal-weighted basis and an asset-weighted basis.
On an asset-weighted basis, South African equity funds have outperformed the S&P SA 50 Index in the year to date and over the year to June. Across other measurement periods, and on an equal-weighted basis, local funds have underperformed the S&P SA 50.
