R100 invested in Ninety One, Allan Gray, and PSG – versus a trusted benchmark

Asset Managers

An analysis by Daily Investor revealed that a benchmark based on the JSE Top 40 and S&P 500 outperformed equity funds from Ninety One, Allan Gray, and PSG.

South Africa’s largest asset managers have come under fire for their high performance fees, which are based on their own benchmarks.

Ranmore portfolio manager Sean Peche argued that many fund managers select benchmarks that are easy to outperform and ensure they get performance fees.

Brenthurst Wealth director supported Peche’s views, saying the average man in the street is hammered by the high fees from large asset managers.

Daily Investor set out to assess how South Africa’s large asset managers performed against widely accepted equity benchmarks.

For this analysis, Daily Investor included three prominent funds:

  • Ninety One Equity Fund
  • Allan Gray Equity Fund
  • PSG Equity Fund

These funds have, on average, weightings of 70% local equity and 30% offshore equity.

To mimic the composition of the funds, Daily Investor used a weighted average benchmark which consists 70% of the JSE Top 40 index and 30% of the S&P 500.

The effect of foreign currency movements was also built into the benchmark to ensure accurate rand values.

Daily Investor calculated the one-year and five-year price returns (excluding dividends) of the funds and compared it to the benchmark.

The results revealed that the funds outperformed the benchmark year-to-date, but the JSE Top 40 index and S&P 500 were comfortable winners over five years.

We also calculated the standard deviation to assess the volatility and risk associated with the funds and the benchmark.

It showed that the funds and benchmark had a similar standard deviation, posing similar risks to investors.

R100 invested over five years

To illustrate the comparative performance of the equity funds from Ninety One, Allan Gray, and PSG over five years, we looked at how a R100 investment would have performed.

The table and chart below show how the investment grew in each fund and how it performed against the weighed JSE Top 40 index and S&P 500 benchmark.

It should be noted that the performance is based on the price returns and does not include dividends. The same conditions were applied for the funds and the benchmark to ensure a fair comparison.

R100 investment over 5 years
Fund Initial Investment Price after 5 years 5 year annualised return
Benchmark (JSE Top 40/S&P 500) R100 R151.95 8.73%
Ninety One Equity Fund R100 R135.29 6.23%
PSG Equity Fund R100 R122.30 4.11%
Allan Gray Equity Fund R100 R119.67 3.66%