Active Vs Passive Investing in South Africa

supersunbird

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Another interesting read about this subject:

Can the average investor afford such significant underperformance?
https://www.moneyweb.co.za/moneyweb...tor-afford-such-significant-underperformance/

If one constructed a portfolio with just two asset classes 12.5 years ago, having 75% in the JSE All Share Index (the maximum equity exposure in a Prudential fund) and 25% in the property index (the maximum), your portfolio would have yielded 615.84, which is an annual return of 15.65% per annum, higher than the JSE All Share Index Total return, which is a far cry from the average of 363.30! This obviously comes in hindsight.
Screen-Shot-2017-08-29-at-9.33.41-AM.png
 

supersunbird

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Oct 1, 2005
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47,194
Check what old mutual charge you.
To quote myself from another thread about how RAs and life insurance companies don't mix (https://mybroadband.co.za/vb/showth...ces-with-Liberty-Financial-Advisers-Brokers):

Coronation - 0%
10X - 0%

You only pay the fees in the unit trusts themselves, expressed at the TIC (TER + TC). 10X does show you the impact of the TIC.

AG:
https://www.allangray.co.za/latest-insights/local-investing/investment-platform-fees-reduced/
We will now charge an annual administration fee (excluding VAT) of a maximum of 0.5% on the first R1.5m invested in non-Allan Gray unit trusts, 0.2% on the next R3.5m and 0.1% on the balance over R5m. The fee will be calculated on the market value of all local platform investments linked to an investor’s investor number. Administration fees for Allan Gray unit trusts are built into the unit price at a fixed rate of 0.2% (excl. VAT). No additional administration fees are deducted.
Here is my transaction summary from my Coro RA, note no fees, cause DIY, so no FA costs either (the complete transaction statement is too long to take a screenshot of):

View attachment 458465
 

supersunbird

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What I will concede is that there was no way to buy these in an RA back then, and even now it's not easy and one will most likely have to use a LISP platform like PSG which would add some costs.
 

supersunbird

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Bit of a thread resurrection.

How much risk are you taking when picking an active manager?

However, it is worth considering that of the five largest funds in the South African general equity category with 10-year track records to the end of March this year, only one has outperformed the longest-running FTSE/JSE All Share Index tracker.

Importantly, this is a like-for-like comparison. It is not comparing these funds against an index, which would ignore fees, but against a fund that tracks the index. This means fees have been taken into account.
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https://www.moneyweb.co.za/investing/how-much-risk-are-you-taking-when-picking-an-active-manager/
 

bchip

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Mar 12, 2013
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Bit of a thread resurrection.

How much risk are you taking when picking an active manager?

https://www.moneyweb.co.za/investing/how-much-risk-are-you-taking-when-picking-an-active-manager/
So the best did 2.80^(1/10) = 10.9% p/annum
The worst did 1.87^(1/10) = 6.5% p/annum
And STX40 / Benchmark did = 10.9% p/annum (this would be excl divs)

These funds will always underperform in bull markets though.
Their mandate is never to be 100% invested in the index at any time because of risk management.
The trick is comparing them in a bear market, they should lose less than a passive investor
 

supersunbird

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So the best did 2.80^(1/10) = 10.9% p/annum
The worst did 1.87^(1/10) = 6.5% p/annum
And STX40 / Benchmark did = 10.9% p/annum (this would be excl divs)

These funds will always underperform in bull markets though.
Their mandate is never to be 100% invested in the index at any time because of risk management.
The trick is comparing them in a bear market, they should lose less than a passive investor/QUOTE]
What has 2016 to 2018 been? They didn't.
 

bchip

Senior Member
Joined
Mar 12, 2013
Messages
821
What has 2016 to 2018 been? They didn't.
Sideways to Up:

1557758151653.png

Bear market
A bear market is a condition in which securities prices fall 20 percent or more from recent highs amid widespread pessimism and negative investor sentiment. [Investopedia]

Example:
1557758329086.png
 

bchip

Senior Member
Joined
Mar 12, 2013
Messages
821
What has 2016 to 2018 been? They didn't.
Its really just logic. They invest 80% in the market, 20% in bonds.

Therefore when the market goes up they only make 80% of the full amount,
when the market loses, they only lose 80% of the loss...
 
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