Heritage Wealth Partners has delivered top-tier performance to clients over 12 months
The Corion Report has become a go-to publication in the South African investments industry. The report gives performance updates of major sectors as well as the various unit trusts in the market.
We are thrilled to confirm that Heritage Wealth Partners’ clients have enjoyed top performance when compared to other funds in the market. This affirms our ongoing commitment to seek out the best investment opportunities for our clients.
September was tough
Green Day wanted to be woken up when September ends and so did the investment community. Bonds were the best performing asset class with a performance of…zero. Niks. Nada. 0.0%.
Global equities returned -4.9% after a general cooling-off of sentiment particularly towards tech stocks. US equity markets have been trading at a significant premium to long-term averages, boosted by stimulus and unusual forces in the market like Robinhood app traders and companies taking large leveraged bets, known as whales.
Within the local equities space, retailers got the lion’s share of gains. The best performing Top 40 shares were Shoprite and Capitec as investors cheered signs of recovery in mid-LSM consumer groups.
Gold counters suffered a sharp sell-off in September, with Harmony Gold taking the worst knock among Top 40 companies, down -19.4%.
Property continues to bleed
Property is the worst performing sector over 1 month, 3 months, year-to-date, 1 year and 3 years. That’s quite an accolade.
Financials have only recently started to improve, but the longer-term performance has been poor.
The Property and Financials sectors are at the mercy of capital markets in South Africa as well as general consumer financial health. Poor economic performance has impacted both sectors with property hit further by subdued local inflation in consumer-facing products sold by retailers. Pressure on input costs of key retail tenants has put lease increases in the spotlight.
There seems to have been a shift in power between landlords and tenants, forcing property companies to rethink their strategies going forward.
It’s concerning to think about the extensive exposure of the South African investor to the property sector. If you have a retirement product, chances are good that the balanced funds in your portfolio have had material positions in property in recent years.
Real assets have been dependable, but the USD Trumps all
The resources sector has been the best performing equity sector over 3 months, year-to-date, 1 year and 3 years.
An increase in money supply has driven growth in real asset prices. Resources stocks offer inflation and Rand hedge elements, which has been a handy strategy in recent times.
Astonishingly, the USD has been the best performing asset year-to-date. If you had just switched Rands into Dollars at the start of the year and kept your money in the bank, you would’ve gained 19.3% in Rand terms.
In local fund management, big hasn’t been beautiful
The two largest general equity funds, Allan Gray Equity and Prudential SA Equity, have suffered losses of -5.6% and -11.0% respectively over one year. That doesn’t look good on an investment statement compared to specialist funds like the Methodical BCI Equity Fund (up 20.7%) or the more substantial 36ONE BCI Equity Fund (+19.6%) and Fairtree Equity Prescient Fund (+18.2%).
The worst of the lot is the Nedgroup Inv Growth Fund, which returned a catastrophic -30.6%. That’s nearly a third of the investment value wiped out in just one year.
On average, the fund managers have not beaten the JSE over the past 12 months. The JSE All Share has gained 2% while the ASISA SA Equity General Category Ave lost -2.9%.
The situation doesn’t get any better for the big names in the balanced funds, which is where most individuals and companies invest their retirement savings.
The biggest balanced fund in the game, Allan Gray Balanced, suffered a double ZERO returning 0.0% in one year. Balanced indeed, between positive and negative.
Coronation Balanced Plus fared better at 3.7%, but Ninety One Opportunity was the clear winner among the market leaders, up 10.6%.
Such was the power of fixed income this year that NedGroup Inv Stable returned 11%, beating many of the large balanced and equity funds. Special mention to Rezco Stable for the best year-to-date return in low equity funds, up 11.3%.
Unsurprisingly, the last 12 months has seen strong inflows into the likes of Ninety One, while traditional managers like Allan Gray have suffered significant outflows.
Global funds have had a terrific year
Anchor Capital and Sygnia dominate the scoreboard here, taking four of the top five spots. Anchor BCI Global Equity FF is on top with 81.3% over one year, followed by Sygnia FAANG Plus Equity Fund at 73.4% and Anchor BCI Global Technology Fund at 56.8%.
Sygnia 4th Industrial Revolution Global Equity Fund is larger than the above three funds put together and has returned 42.7% over one year.
Allan Gray and other traditional houses have done better here, with Allan Gray – Orbis Global Equity FF up 20.5% over 12 months and Ninety One Global Franchise FF up 24.8% but these results still lag the top performers significantly.
Once again though, the average global fund manager didn’t beat the market. The fund average was 20.5% over 12 months while MSCI World Equities returned 22.1%.
How have Heritage Wealth Partners’ clients done?
Our Advanced Retirement Annuity Model portfolio has returned 13.3%. This is among the best performances in the balanced fund space, demonstrating the value of seeking out the best investment managers rather than simply relying on the best-known brands.
However, the Unicorn Portfolio has produced an even more extraordinary performance. Over 1 year, this terrific investment is up 62%. While this is impressive, the full scope of its success can really be seen when viewing it from inception: in 18 months, the Unicorn is up over 135%.
The particularly impressive thing about Unicorn is that it is far from being a pure tech fund, so these returns have been generated on a more diversified basis than funds like FAANG Plus. The importance of this fact became most evident as global tech giants cooled off recently while Unicorn kept climbing.
Clients of Heritage Wealth Partners can sleep soundly at night, safe in the knowledge that their money is being put to work through our successful investment strategies.