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Citywire ratings: How SA managers stack up

It’s been a tough old time for local fund managers.

Citywire ratings: How SA managers stack up

According to the latest Citywire fund manager ratings, South African managers have done noticeably worse than their global counterparts over the past three years.

As always, however, there are some notable exceptions.

Citywire uses the information ratio to rank managers every month. This is defined as a manager’s annualised excess return, divided by their tracking error against an appropriate benchmark. This provides a measure of risk-adjusted performance. (For more detail on exactly how the calculation is made, please see here.)

The graph below shows how the risk-adjusted performance of the average South African active manager compares against the global average. There is a performance gap of approximately -0.56 between the two.

 

Source: Citywire (click to enlarge)

Three things are worth noting.

The first is that the average active global manager has a negative ratio. In other words, they under-perform their benchmark on a risk-adjusted basis. After fees, this is a predictable outcome.

However, the risk-adjusted performance of the average South African fund manager has been meaningfully below the global average. This is across all asset classes, excluding fixed income.

Some of this can therefore undoubtedly be put down to the muted returns from local growth assets over this period. Managers who have been able to load up on US equities have been far more able to secure returns for their clients.

However, delivering risk-adjusted performance has certainly not been impossible. This is evidenced by the ratio of 0.98 achieved by South Africa’s highest-rated manager, AA-rated Jacobus Lacock (pictured below).

Lacock currently runs the Fairtree Balanced Prescient fund, but also previously ran the Fairtree Flexible Balanced Prescient fund. He has been with Fairtree Capital since 2011.

Equity funds

Focusing on equity managers specifically, the average active South African manager has again under-performed the average global manager by a meaningful margin. In this case the performance gap is -0.54.

What is notable is that this gap actually narrows when considering only South African equity funds, and therefore excluding global, worldwide or regional mandates. Over the past three years, South African fund managers, on average, produced better risk-adjusted returns from local equity than they did from international equity.

It’s important to note that this does not reflect the absolute return, but rather the return above the benchmark. The opportunity to out-perform the market locally has therefore been greater.

Source: Citywire (click to enlarge)

The two highest-rated managers, however, both operate in the global equity sector.

AA-rated Justin Maloney (pictured below) tops the list, with a sector manager ratio of 0.99. Maloney has been running global equity funds at Melville Douglas since 2014 and is currently based in Jersey. He manages the Melville Douglas Stanlib Global Equity feeder fund.

The next highest manager is A-rated Dawie Conradie, who was recently appointed as CIO at Autus Fund Managers. He has a sector manager ratio of 0.95, also in global equity. He has worked at Autus since 2009, and manages the Autus Prime Global Equity feeder fund.

Mixed assets

Interestingly, both the global and local average ratings are worse for mixed asset (multi-asset) fund managers than in the equity space. The negative differential is, however, slightly lower for South African managers at -0.39.

Source: Citywire (click to enlarge)

The top-rated local managers in this space are the co-managers of the Fairtree Balanced Prescient fund, AA-rated Jacobus Lacock and AA-rated Stephen Brown. Their sector manager ratio for Mixed Assets – Aggressive ZAR is the highest of any local managers in any sector at 1.02.

Citywire was unable to examine the relative performance of local bond managers, as the South African bonds sector is not included in the global ratings.

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Related Fund Managers

Stephen Brown
Stephen Brown Average Total Return:
23.53%
5/74 in Mixed Assets - Aggressive ZAR (Performance over 3 years)
Jacobus Lacock
Jacobus Lacock Average Total Return:
23.53%
4/74 in Mixed Assets - Aggressive ZAR (Performance over 3 years)
Justin Maloney
Justin Maloney Average Total Return:
51.22%
21/98 in Equity - Global (Performance over 3 years)
Dawie Conradie
Dawie Conradie Average Total Return:
59.27%
18/98 in Equity - Global (Performance over 3 years)
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