Old Mutual, Sanlam, and Momentum domestic equity funds compared
The Sanlam Top Choice Equity Fund outperformed Old Mutual and Momentum over the last five years and provided narrowly better returns than the JSE Top 40.
All three funds invest in companies listed on the Johannesburg Stock Exchange (JSE), with the mandate of providing above-market returns to their clients.
Investors pay portfolio managers to grow their capital over a long time horizon.
In assessing how effectively these funds have grown investors’ capital, Daily Investor compared the performance of the funds to the Satrix Top 40 index.
The Satrix Top 40 tracks the performance of the 40 biggest companies by market cap on the JSE.
Over the last five years, the Satrix Top 40 grew by 10.49% on average per year.
The Sanlam domestic equity fund narrowly outperformed this benchmark.
The bad news for investors in the Old Mutual Equity Fund and the Momentum Equity Fund is that the JSE Top 40 performed considerably better than these actively managed funds.
This means investors would have received a better return on this time horizon by investing their money in the Satrix top 40.
The Old Mutual fund has the largest portfolio size despite performing the worst of the three funds and having the second-highest total expense ratio.
Sanlam Top Choice Equity Fund
The Sanlam Top Choice Equity Fund holds approximately 20 listed shares on the JSE, with significant exposure to technology giants Naspers and Prosus.
The fund grew by an average 10.94% over the last five years. This is 0.45% more than the Satrix Top 40 and more than 5% more than its own benchmark.
The top five holdings of the portfolio and their weightings are:
- Naspers – 10.08%
- Prosus – 9.77%
- Anglos – 7.54%
- ABSA – 5.95%
- FirstRand / RMBH – 5.82%
The fund invests in a concentrated portfolio by taking high-conviction bets on companies Sanlam expects to grow over the medium to long term.
Portfolio size – R1.5 billion
Benchmark – Composite (FTSE/JSE SWIX: 97% | STeFI: 3%)
Total expense ratio (Over three years) – 1.88%
Momentum Equity Fund
The Momentum Equity Fund is targeted toward investors with a high-risk profile and has a portfolio with an above-average allocation to small and medium-cap companies.
Momentum advises clients to invest over a five-year or longer time horizon.
Over the last five years, the fund has grown by an average of 6.35% per year. This means the fund underperformed the Satrix Top 40 by 4.14% over the period. The fund outperformed its own benchmark by an annualised 0.26% over five years.
Here are the top five holdings of the fund:
- FirstRand – 4.86%
- Anglo American – 4.29%
- Prosus – 4.18%
- Naspers – 3.90%
- British American Tobacco – 3.42%
The fund has a sectoral bias toward the financial and basic materials industries.
Portfolio size – R 3.84 billion
Benchmark – FTSE/JSE Capped SWIX
Total expense ratio (Over three years) – 1.77%
Old Mutual Equity Fund
The Old Mutual Equity Fund underperformed both the JSE Top 40 and its own benchmark over the last five years.
Old Mutual recommends investing in the fund for over five years and says there is a moderate to high level of risk associated with the fund.
The fund aims to achieve its performance objective through well-researched and superior share selection.
The fund has grown by an average of 5.7% over the last five years. That is 1% less than the fund’s benchmark and almost 5% less than the Satrix Top 40.
Here are the top five holdings of the fund and their weight in the portfolio:
- ABSA – 6.3%
- British American Tobacco – 6.2%
- FirstRand – 5.7%
- Prosus – 5.4%
- Standard Bank – 4.2%
The fund has a sectoral bias towards industrials and financials.
Portfolio size – R 4.9 billion
Benchmark – FTSE/JSE Capped SWIX Index
Total expense ratio (Over three years) – 1.86%
Final comparisons
Here is a table comparing the funds’ annualised performance over different periods:
| Fund | 1 year | 3 years | 5 years |
| Satrix Top 40 | 6.7% | 20.17% | 10.49% |
| Sanlam Top Choice Equity Fund | 0.90% | 17.56% | 10.94% |
| Momentum Equity Fund | 3.90% | 15.00% | 6.35% |
| Old Mutual Equity Fund | 1.50% | 11.80% | 5.70% |
Here is a table showing the difference between the growth in the fund and their benchmarks:
| Fund | 1 year | 3 years | 5 years |
| Sanlam Top Choice Equity Fund | (3.23%) | 3.14% | 5.10% |
| Momentum Equity Fund | 0.15% | (1.52%) | 0.26% |
| Old Mutual Equity Fund | (3.1%) | (3.8%) | (1%) |
Finally, here is a table showing the difference between the performance of the funds and the Satrix Top 40:
| Fund | 1 year | 3 years | 5 years |
| Sanlam Top Choice Equity Fund | (5.8%) | (2.61%) | 0.45% |
| Momentum Equity Fund | (2.8%) | (5.17%) | (4.14%) |
| Old Mutual Equity Fund | (5.2%) | (8.37%) | (4.79%) |
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