Coronation Fund Managers, the winner of the Raging Bull Award for the Domestic Management Company of the Year for 2012, has strengthened its leading position this past quarter with a near-perfect score in the PlexCrown Ratings survey of unit trust management companies.
The survey takes into account the PlexCrown ratings managers obtain across their range of funds. The fund ratings are based on four or five different measures for risk-adjusted performance over three and five years, ending, for the latest survey, on March 31.
The ratings are weighted according to the funds’ sizes to obtain an overall score of between one and five PlexCrowns.
Coronation obtained a near-perfect score of 4.906, Ryk de Klerk, the executive director of PlexCrown Ratings, says.
Four of Coronation’s funds that were previously not rated by PlexCrown Ratings have been included this quarter for the first time. This is mostly a result of changes to the collective investment classification system introduced by the Association for Savings & Investment SA at the beginning of the year.
Three of the four newly included Coronation funds – the Top 20, Capital Plus and Strategic Income funds – obtained the highest score of five PlexCrowns each, while the fourth, the Coronation SA Capital Plus Fund, obtained four PlexCrowns.
Funds that are not ranked in their sub-categories do not qualify for PlexCrown Ratings.
Coronation’s Strategic Income Fund was previously classified as a domestic fixed interest varied specialist fund and was not ranked. It has now moved to the South African multi-asset income sub-category, and, because these funds are ranked, it is now being rated by PlexCrown Ratings.
Coronation’s Capital Plus and SA Capital Plus funds were previously classified as targeted absolute and real return asset allocation funds and were not ranked. This sub-category has been abolished and both funds have moved into the multi-asset medium equity sub-category.
The Top 20 Fund was previously in the domestic equity large cap sub-category. Funds in this sub-category were not rated because they are largely index-tracking funds.
After changes to the classification system, Coronation moved its Top 20 Fund, which uses the FTSE JSE All Share 40 Index as its universe, but does not track the index, to the South African equity general sub-category.
In total, 16 of the company’s 19 funds that were rated achieved ratings of four or five PlexCrowns, and six funds were top of their sub-categories.
In addition, the methodology of the PlexCrown Ratings survey has favoured Coronation’s better-performing funds (see “Ratings methodology”).
Coronation led its peers on its average PlexCrown rating (4.926) for its South African funds. The manager was fifth among its peers on its weighted average PlexCrown rating in the broad South African equity and real estate sector, third in the South African interest-bearing and income sector and third in the broad South African multi-asset sector. It also took third place in the Global and Worldwide sector, with a weighted average PlexCrown rating of 4.793.
Allan Gray was the runner-up in the survey, with an overall weighted average rating of 4.613 PlexCrowns.
Allan Gray was second among its peers for the management of South African funds, with a weighted average rating of 4.721 PlexCrowns, and it shared the lead in the broad South African equity and real estate category.
The company achieved joint first place in the South African interest-bearing and income category, was fifth in the South African multi-asset category, and shared fifth place in the global and worldwide sector.
Allan Gray has seven funds that are rated. Its Optimal Fund, which was previously not rated because it was in the targeted absolute and real return asset allocation sub-category, has moved into the multi-asset low equity sub-category. The fund obtained the lowest rating of one PlexCrown.
Three of Allan Gray’s funds – its Balanced Fund, Bond Fund and Equity Fund – each obtained the highest rating of five PlexCrowns, while its foreign funds – the Orbis Global Equity Feeder Fund and the Orbis Global Fund of Funds – obtained four PlexCrowns each.
The Allan Gray Stable Fund obtained three PlexCrowns.
Nedgroup Investments took third spot overall, with 3.837 PlexCrowns. The company’s South African rating of 3.967 PlexCrowns was achieved as result of its fourth places in the South African interest-bearing and income sector and the South African multi-asset sector.
De Klerk says Nedgroup’s overall rating was, however, diluted by average showings in the broad South African equity and real estate sector and the global and worldwide sector.
Nedgroup’s Core Income Fund, Entrepreneur Fund (equity small companies), Financials Fund, and Stable Fund (multi-asset low equity) each achieved five PlexCrowns and three of its other funds obtained four PlexCrowns each.
Among the management companies that did not qualify for overall management company ratings, Foord shared the lead in the South African equity and real estate sector and South African multi-asset sector, while RE:CM led the way in the global and worldwide sector.
Oasis was the leading offshore manager in the survey with an overall offshore rating of 4.250 PlexCrowns.
Offshore managers are those with funds domiciled in countries other than South Africa and denominated in other currencies.
PlexCrown Ratings rates offshore funds that are approved by the Finan-cial Services Board as suitable for South Africans.
Oasis was first in the global real estate general sub-category and was joint eighth in the global equity sector.
The company has three offshore funds that qualify for PlexCrown Ratings. Its Crescent Global Property Equity Fund achieved five PlexCrowns and its Global Equity Fund four PlexCrowns.
Momentum was runner-up, with an overall rating of four PlexCrowns. It achieved joint second place in global asset allocation sector and was joint third in the global equity sector.
Alexander Forbes Strategic was third, with an overall offshore rating of 3.750 PlexCrowns. The manager achieved sixth place in the global asset allocation sector, where its Global Aggressive Fund achieved five PlexCrowns and its Global Balanced Fund achieved four PlexCrowns.
RATINGS METHODOLOGY
PlexCrown Ratings took the opportunity afforded by the reclassification of the collective investment schemes to tweak the methodology it uses to calculate the rankings of management companies.
Ryk de Klerk, executive director of PlexCrown Ratings, says it previously applied equal weightings to the scores managers obtained for each fund in various sub-categories to determine their average for a sub-category or sector. For example, if a fund manager had three domestic equity funds, the scores of the funds would be added up and divided by three to obtain an average score in that sub-category.
The new methodology considers funds in four broad sectors: SA Equity and Real Estate, SA Interest Bearing, SA Multi-Asset, and Global and Worldwide.
In each sector, each fund’s rating is weighted according to the size of the fund relative to the combined size of all the manager’s rated funds.
An average rating for the management of funds invested mostly in South Africa is determined using the averages for the three South African sectors.
To determine the overall rating, the averages of the four broad sectors are combined according to the following weights: South African Equity and Real Estate 25 percent, and South African Interest-bearing and Multi-asset Income combined: 25 percent; South African Multi-asset (excluding South African Multi-asset Income): 35 percent; and Global and Worldwide: 15 percent.
The fund sizes at the end of the previous quarter are used in the calculations.
The methodology to rate foreign management companies in the first quarter 2013 was unchanged but is currently under review.
Manco Survey to March 31, 2013 - average Plexcrown Rating
DOMESTIC MANAGERS
1. Coronation (4.906 PlexCrowns)
2. Allan Gray (4.613)
3. Nedgroup Investments (3.837)
4. Absa (3.603)
5. PSG (3.577)
6. Marriott (3.561)
7. Investment Solutions (3.438)
8. Prudential (3.362)
9. SIM (3.308)
10. Old Mutual (3.031)
11. Discovery (2.986)
12. Investec (2.941)
13. Stanlib (2.894)
14. Momentum (2.793)
15. Prescient (2.541)
16. Oasis (2.492)
OFFSHORE MANAGERS
1. Oasis (4.250 PlexCrowns)
2. Momentum (4.000)
3. AF Strategic (3.750)
4. Lloyds (3.741)
5. ACPI (3.667)
6. M&G (3.500)
7. Franklin Templeton (3.382)
8. Stanlib (3.194)
9. Investec (3.056)
10. Orbis (3.000)
10. Standard Bank (3.000)
12. Prescient (2.500)
13. Nedgroup Invest. Int. (2.250)
14. Sanlam (2.167)
15. Ashburton (2.000)