Coronation, Allan Gray, and PSG SA equity funds compared

An analysis by Daily Investor shows that Coronation’s South African Equity Fund outperformed Allan Gray and PSG over the last five years. However, none of them beat the Satrix Top 40.

South African equity funds are unique in being limited to investing only in equities listed on the Johannesburg Stock Exchange (JSE).

All these funds caution that their returns are volatile and are influenced by political and economic events in South Africa. 

However, this does not mean that their performance is tied to South Africa’s economic performance. 

These funds are also invested in global companies listed on the JSE, such as Richemont, Glencore, Prosus, BHP Billiton, AB InBev, and British American Tobacco. 

The bad news for investors in Coronation, Allan Gray, and PSG’s local equity funds is that they could not outperform the JSE Top 40 Index over five years.

This means investors would have been better off investing in a JSE Top 40 index tracker than putting their money with one of these funds.

Coronation SA Equity Fund

Coronation’s South African Equity Fund aims to achieve long-term growth by investing in South African-listed companies. 

The fund is fully invested in JSE-listed equities at all times, with a bias towards financials, where 28.9% of funds are invested, followed by mining at 17.8% of funds. 

Coronation recommends investing in this fund for a period of at least 10 years to mitigate the impact of short-term fluctuations and to benefit from long-term outperformance. 

• Fund size – R2.45 billion
• Benchmark – JSE Capped All Share Index
• Total investment charge – 1.84%

Allan Gray SA Equity Fund

As with Coronation’s South African Equity Fund, Allan Gray’s is always fully invested in JSE-listed equities. 

This fund aims to create long-term wealth while cautioning that returns will likely be volatile in the short and medium term. 

The fund will compensate for short-term underperformance with long-term outperformance, according to Allan Gray, due to the fund’s constituents being materially different from the index. 

Allan Gray’s fund is heavily invested in mining and financial companies, with them receiving 25.7% and 23.7% of funds, respectively. 

• Fund size – R5.1 billion
• Benchmark – JSE All Share Index
• Total investment charge – 1.93%

PSG SA Equity Fund 

PSG’s South African Equity Fund is unique in being available only to multi-managers and institutional investors. The fund also charges no performance fees.

The fund aims to create long-term capital growth and outperform the JSE over the long term. 

PSG notes that, by being limited to JSE-listed companies, the fund is highly concentrated, which makes returns highly volatile in the short term. 

It recommends investors be prepared to accept the capital loss in the short term for outperformance in the long term. 

• Fund size – R228 million 
• Benchmark – JSE Capped All Share Net Return Index
• Total Investment Charge – 1.59% 

Performance comparison