Prudential Portfolio Managers has overtaken Allan Gray as the top-performing unit trust management company based on the risk-adjusted performance of most of its funds.
Last quarter Prudential was ranked third in the PlexCrown management company rankings after Allan Gray and runner-up Investec.
But in the last few days of this past quarter to September 30, Prudential's overall PlexCrown rating overtook that of Allan Gray, with Prudential attaining an average score of 4.13 PlexCrowns over Allan Gray's 4.00.
In addition, Oasis moved up from sixth position to third and RMB from fifth to fourth.
The PlexCrown ratings rate all qualifying unit trust funds on four different measures of risk-adjusted performance over periods up to five years. (For more details on how these are calculated, visit the PlexCrown website at www.plexcrown.co.za)
These ratings - weighted towards longer-term performance - are used to determine an overall score for each unit trust management company. The rankings should show you which company is performing consistently well over all their funds without putting your investment at undue risk.
Ryk de Klerk, a director of PlexCrown Ratings, says the PlexCrown ratings Prudential earned on indi- vidual funds were very stable in the volatile market conditions experienced during the past quarter. Three Prudential funds had minor upgrades and the rest retained their ratings.
Before calculating the overall management company rating, PlexCrown Ratings uses individual fund ratings to calculate an average rating for each company in certain broad sectors covering similar unit trust sub-categories, such as domestic equity and domestic asset allocation funds.
From these averages, an average rating for all domestic funds and another for all foreign funds is determined for each company.
The overall rating is determined from these two average ratings, with the domestic fund average rating accorded a weight of 75 percent and the foreign fund rating 25 percent.
Prudential achieved top spot ahead of Allan Gray in the average PlexCrown ratings for all domestic funds for the period to the end of September.
Prudential has six funds that were rated in the PlexCrown rating system, with its two equity funds both obtaining five PlexCrowns and its domestic prudential fund, domestic bond fund and global bond fund obtaining four PlexCrowns. Its global equity fund obtained three PlexCrowns.
These ratings put Prudential in joint top spot for the management of equity funds invested in local markets.
The company was in joint second place for the management of domestic fixed interest funds and in joint ninth position for domestic asset allocation funds. It was ranked joint seventh for its foreign market funds.
Runner-up Allan Gray excelled in the domestic asset allocation sector with both its funds in these sub-categories obtaining five PlexCrowns.
Allan Gray's domestic bond fund earned a three-PlexCrown rating and its domestic equity fund was upgraded from a three-PlexCrown rating last quarter to four crowns this quarter.
On the basis of the performance of its equity fund, Allan Gray was fourth among its peers for the management of domestic equity funds, and its bond fund rating earned it seventh position among its peers for the management of fixed interest funds.
When the ratings of these four funds are combined to determine a rating for managing all types of domestic funds, Allan Gray came up second in the list of managers.
Allan Gray's offshore partner, Orbis, earned the company excellent ratings in the foreign unit trust sub-categories.
Its rand-denominated foreign equity fund obtained a rating of four PlexCrowns giving the company first position among its peers in the foreign equity average ratings.
Allan Gray's foreign asset allocation fund also obtained four PlexCrowns, giving the company third position among its peers based on average ratings for the management of foreign and worldwide asset allocation funds.
Combined, these ratings earned Allan Gray joint first position with Oasis and Futuregrowth for the management of rand-denominated foreign unit trust funds.
Oasis, the manager in third position overall among unit trust managers, showed significant improvement in rankings, De Klerk says.
Oasis has eight funds that were ranked in the PlexCrown rating system. All but one earned ratings of four or five PlexCrowns.
The performance of the company's domestic general equity fund and Shariah general equity fund earned it third position among its peers for the management of domestic equities, while its two asset allocation funds earned it joint seventh position among its peers in the asset allocation sector.
Oasis's domestic bond fund earned only two PlexCrowns and this pulled down its average score for the management of all domestic funds, putting it in fifth position relative to other management companies.
Oasis was in joint first position in the average PlexCrown ratings for the management of foreign funds.
Both of Oasis's foreign equity general funds had rating upgrades to four PlexCrowns each during the quarter, and among other fund managers with qualifying foreign equity funds, the manager was in joint first position.
Local unit trust investors generally have low exposure to the equity market and have been less affected by sharp falls in share markets around the world, Di Turpin, the chief executive of the former Association of Collective Investments, says.
But many people are likely to have too few of their investments exposed to equities to ensure that their assets enjoy good growth in the years ahead. Turpin says now that share prices have fallen, it is a good time to address this.
Many investors have put their money in money market funds, which now account for 33 percent of all unit trust fund investments. Many more have gone into asset allocation funds (24 percent of our money is in these funds), which have a more limited exposure to the share market than equity funds.
This is according to the latest statistics revealed by the Association for Savings and Investments SA (Asisa), the new organisation representing asset managers, unit trust companies, linked investment service providers, multi-managers and life insurance companies.
Fixed interest funds now hold 18 percent of all local unit trust investments. The lion's share is in flexible fixed interest funds that move between money markets, bonds and sometimes property.
Only 23 percent of unit trust investments are in equity funds.
It is perhaps because we have been so cautious that we haven't succumbed to much panic selling in the midst of the global financial market turmoil, unlike collective investment investors in the US and Europe.
However, a large amount of money has been shifted to and new money invested in the safe havens of money market funds.
"Local investors seem to have wisely decided to sit tight and wait for markets to calm down instead of making rash decisions," Turpin says.
But, she says, if you need greater exposure to equity markets, you should consider moving some of your investments cautiously into that sector.
Phasing money gradually into equity markets is a good way to go, she says, because you get the benefits of an average of the market's ups and downs.
The Asisa statistics are for both individual and institutional investors (such as pension funds and other big corporate investors).
According to Asisa about R900 million was sold out of domestic equity funds, much less than what was sold out of these funds in the previous two quarters.
About R15 billion was invested in money market funds and R5.8 billion was invested in fixed interest varied specialist funds.
In total the net amount invested in unit trusts this quarter (that is the amounts invested less the amounts withdrawn) was R19 billion - R10 billion more than last quarter.
The total amount invested by unit trust funds fell by R9 billion to R647 billion, reflecting the fall in the market, Turpin says.
Net inflows for the past 12 months ended September 2008 totalled R42 billion.