The performance of South African unit trusts for the period 1984 to 2003

[摘要] ENGLISH ABSTRACT: Many fund managers who are supposed to have your best interest at heart have become just as greedy,have vested interests and their performance has been mediocre. Until they clean up their act, your best betis to opt for an index fund, or the type that uses our money to track a stock market index, provided theinitial and ongoing costs are low if you invest in shares.A great many funds have been run well and conscientiously. However, it's often not clear to individualswhich ones these are. In the absence of clarity, those index funds that are very low-cost are investorfriendlyby definition and are the best selection for most of those who wish to own equities.Warren BuffetThroughout the past twenty years, investment funds have been transforming financial markets. Therehas been a tremendous growth in this industry and at the end of 2003 more than USD 13 trillion wereinvested in investment funds around the globe. In the United States, 12 percent of all money invested inmutual funds resides in index mutual funds and investors can choose from 149 index funds. Academicshave researched mutual funds in depth and most are in favour of index-related funds. The reason for thisis that the average US mutual fund that is actively managed does not manage to outperform itsbenchmark index.In South Africa, the scenario is very different. There are currently only nine index unit trusts with a netasset value of ZAR 1.4 billion. This represents only 60 basis points of all money invested in South Africanunit trusts. In this study, a few factors are discussed as possible contributors to this situation, withexchange-traded funds and enhanced index fund strategies identified as the most significant factors.This study investigates whether active unit trusts succeed in outperforming their benchmark index. Itprovides empirical research showing that All-Share Index have been a better risk-adjusted investmentover the twenty years studied. This may be seen as a reason why investors prefer enhanced strategiessince they provide a premium on the index's return, and the risk and costs are lower than for active unittrusts.Exchange-traded funds have accumulated investments of close to ZAR 6 billion since the launch of thefirst Satrix fund, Satrix 40, in 2001. These funds aim at the same return as index unit trusts and havesignificant cost advantages over index unit trusts.

[发布机构] Stellenbosch University