The latest S&P Indices Versus Active (SPIVA) scorecard for South Africa highlights just how concentrated the local market has become.
Over the first six months of 2020, just 27% of active equity managers out-performed the large-cap S&P South Africa 50 Index. However, 64% performed better than the broad market S&P South Africa Domestic Shareholder Weighted (DSW) Capped Index.
Large cap fortunes
‘The contrast in fortunes of the two benchmarks continued to highlight the relative strength of South African large-cap stocks when compared with small and mid caps,’ said Andrew Innes and Andrew Cairns from S&P Dow Jones Indices, co-authors of the report.
‘The large-cap benchmark, the S&P South Africa 50, returned 4.5% more in the first six months of 2020 than South African equity funds measured on an asset-weighted basis. This large-cap benchmark dominance is also reflected over the five-year period, when 95% of South African equity funds underperformed. On an asset-weighted basis, these funds underperformed by 3.3% annually.’
On an asset-weighted basis, the average performance of South African active equity funds was however ahead of the S&P South Africa DSW Capped Index over six months, one year and three years. Over five years, they performed in-line with the index.
(Click to enlarge)
(Click to enlarge)
The report also highlighted the challenge for local asset managers investing in global equities. Although 31.7% of active managers in this category out-performed the S&P Global 1200 over the first six months of 2020, only 10.3% beat the index over five years.
On an asset weighted basis, the average active global equity manager under-performed the S&P Global 1200 by 2.0% in the first two quarters of 2020, and by 2.6% per annum for the past five years.
In contrast, a majority of local fixed income managers out-performed their relevant benchmark indices over most time periods.
Although only 46.1% of short-term bond fund managers beat the STeFI Composite for the six months to the end of June, 84.8% have out-performed the index over five years.
Amongst diversified/aggregate bond funds, 51.5% of local active managers have delivered a return above the S&P South Africa Sovereign Bond 1+ Year Index over five years.
The full SPIVA report can be downloaded here.