Leon Greyling, COO of ICTS

The multitude of investment performance surveys contain a wealth of data that, unless analysed carefully, can possibly lead you down the wrong path – an expensive one!

2024 has come and gone and we’re well into 2025 now.  The surveys with results through to the end of December 2024 have been published and I have spent some time looking (and analysing) the results of the Alexforbes Global Manager Watch™ – Best Investment View (46 participants with assets surveyed of R790 billion) and the Alexforbes SA Equity Manager Watch™ Survey – Benchmark Cognisant (49 participants with assets surveyed of R309 billion).

Firstly….over what period/s do I assess the results?  I was taught 3 years is a minimum as that allows for market cycles to play out reasonably well, so I start there and then consider the shorter term (minimum one year) as a way of determining what questions I should ask to understand better, and the longer term to assess the sustainability of the results.

This year tells me a few interesting things – looking at the stronger 3-year numbers.  I have taken an extract of the top 5 performers from the Alexforbes Global Manager Watch™ Survey – Best Investment View:

My initial observations:

• The PPS Managed Fund’s longer term performance (3 years +) has been boosted by an excellent 1-year result. Is this sustainable? How much risk was assumed in achieving this and could it reverse as quickly?  How is this managed and by whom?
• Allan Gray Global Balanced and PSG Balanced Fund look strong over 3 years but 1 year isn’t great. Immediately I know to check on how their positioning or philosophy suited (or not) the markets over the past year.
• Abax Balanced Fund and Coronation (Managed) have done consistently well. That’s impressive.  I will be interviewing Abax (as the lesser-known entity) on EBnet.Stream to find out more about how they achieved this – look out for this interview over the next few days.

Now let’s overlay a look at the risk statistics and compare the results of the chosen funds/managers against the survey’s key stats.

Some interesting points:

• “Risk” is needed to outperform and is a good way to compare the nature of funds one relative to the other. But is “volatility” or “tracking error” really risk to an investor?  I would think that perhaps the risk of loss, or minimizing loss, is more aligned with an investor’s needs.  If you listen to my interviews on EBnet.Stream with various of the managers, you will appreciate that some rather focus on minimizing downside risk or absolute risk, yet still have high tracking errors or even volatility.  Please read my recent article on risk measures to gain some insights into this.  You can find it here https://www.ebnet.co.za/risk-and-return-goes-together-like-strawberries-and-cream/

• The discrepancy between the highest and lowest performers is jaw dropping – 9,13% per annum over 3 years and 7,55% per annum over 5 years. Yes, that’s PER ANNUM!  The difference between the upper and lower quartiles is approximately 2% per annum over both 3 and 5 years.  Manager selection and blending is so important.  The role of the advisor/consultant/multi-manager is naturally so important.  Is the necessary accountability in place though?  The impact of poor decisions has a massive impact on member outcomes.

Now, casting my eye on the Alexforbes SA Equity Manager Watch™ Survey, I’ve created an extract therefrom that shows the top 5 performers (out of 48 participants) over 3 and 5 years and a few other interesting and worthy candidates that caught my interest:

My further observations:

• “Big” isn’t necessarily better. There are a lot more relatively unknown names coming to the fore.  Is it the flexibility of managing less assets?
• Again, “risk” is a necessary evil. But as explained, risk is in the eye of the beholder.  Listen to my interviews with the likes of 36One, Stanlib Systematic Solutions investment team head, and Truffle to understand more.
• The numbers can only tell you so much. Stanlib have done well in the results of their SA Equity fund, yet their Multi-Asset Solution over the same periods (3 and 5 years) doesn’t look so great (despite largely having the same SA equity strategy).  Is there more than one Stanlib??!!  Well no…listen to my interview with the Head: Multi-Asset investment team at Stanlib for clarification that teaches us about the importance of context.
• Also, look out for my interview over the coming days with the Chief Investment Officer of All Weather, another interesting, yet lesser-known contender.

I can only write so much in a single article, so to close off here are some conclusions:

“Look back over the past, with its changing empires that rose and fell, and you can foresee the future too.” Marcus Aurelius

• The surveys are an excellent tool but need interpretation and an unpacking of the context. With an understanding of the context, past performance can indeed be an indication of future performance!
• Be careful in assessing risk – because it’s personal!
• Understanding investment manager performance requires help from those that engage with the numbers and the “language” frequently. As an investor/trustee, lean on your advisor/consultants – hold them accountable (where’s your assessment scorecard for them?)  If you’re an advisor/consultant, up your game, be inquisitive and leave no stone un-turned (your role is super important and impactful – if done right).  Read EBnet!!  It’s a trove of great information and opinions.
• The PPS Managed Fund is managed by 36One.  No surprises there!😉

ENDS

For more of my {hopefully useful} series of articles related to investment surveys and investment managers please see:

https://www.ebnet.co.za/investment-performance-surveys-clarity-or-clutter/

https://www.ebnet.co.za/risk-and-return-goes-together-like-strawberries-and-cream/

Please also keep checking EBnet.Stream for more interviews landing monthly.