In a recent Citywire article, Patrick Cairns takes a look at six equity funds riding the value wave.
Cairns highlights that to be a successful value manager, you need patience. “You can find yourself on the wrong side of the market for some very long periods. But, if you can hold onto your convictions, and your process, the times when you are right can be quite spectacular.”
The experience of six local value-oriented funds over the past 16 months is an indication thereof.
“The average return of these six funds for the first 10 months of 2020 was -17.1%. For the six months since the start of November, however, they are up by an average of 40.5%.These six funds are all among the top 15% of performers for the year to date in the ASISA South Africa equity general category. Last year, all but one of them were in the bottom quartile.”
| SA general equity fund performance | ||
| Fund | 1 Jan 2020 to 30 October 2020 | 1 November 2020 to 30 April 2021 |
| 1nvest Sector Neutral Value Index Tracker fund A | -22.8% | 46.6% |
| Momentum Value Equity fund A | -20.1% | 43.1% |
| PSG Equity fund A | -21.0% | 42.1% |
| Ninety One Value fund R | -20.5% | 41.0% |
| ClucasGray Equity Prescient fund A1 | -21.7% | 35.5% |
| Counterpoint SCI Value fund A1 | 3.7% | 34.6% |
| Category Average | -10.1% | 28.6% |
Source: Morningstar
About the top six
- The two best performers in the rally from this group are the two smart beta products.
- The performance from all six of these funds has been achieved in quite different ways. The various portfolios are more different than they are similar, with very little overlap in their top 10 holdings.
- The only commonality among these six funds is their meaningful exposure to mining. They all have at least two miners in their top 10.
- The one position that these funds do all share is that none of them have Sasol in their top 10.
- There is also no agreement between these funds when it comes to their exposure to the other significant value sector at the moment: financials.
“That these portfolios have all prospered, despite looking so different, shows that the value rally has been reasonably widespread. It also indicates that, after a very long time, the JSE is finally showing a degree of breadth,” Cairns concludes.
