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Market crash turns heroes into villains overnight
Only 20% of unit trusts show positive returns over the past quarter, writes LUCIENNE FILD
Of the 174 unit trusts in the market - across all sectors from equity to money market - only 35 gave their investors a positive return for the three months ending September 30. Gold and mining unit trust funds emerged as the clear winners over the quarter, after being outcasts for five years. The accompanying table shows the 25 best and worst performing funds for the quarter. The average return of the 174 funds is a loss of 16.3% - telling the tale of one of biggest crashes in recent market history. Over the quarter the JSE all-share index fell by 33% and the all-bond index by 9%. The No 1 fund for the quarter is the Old Mutual Gold fund with a 15.9% gain, followed by the Old Mutual Mining fund at15.7%, and the Standard Bank Gold fund at 14.6%. Investors in money market funds will be smiling. Eight out of the nine funds made it into the top 25 for the quarter. The ninth fund, the Old Mutual Money Market fund, was launched only at the end of August. A money market fund invests in the short-term money market. Only one international fund, the Coronation International Growth fund, is to be found among the top 25 funds. In a strange twist of fate, the previous top-performing smaller companies funds came in stone last over the quarter, together with their big brother shares in the general equity and financial sectors. The worst-performing fund for the quarter is the BOE Emerging Focus fund, which almost halved its value by a loss of 40.5%, followed closely by the Investec Growth fund, losing 38.5%, and the Investec Value fund, with a loss of 36.2%. Of the 11 smaller companies funds, 10 find themselves among the bottom 25 for the quarter. This should drive home the point to investors that specialist funds carry the highest risk of all. At the end of the second quarter, market analysts expressed concern at the high number of investors who switched into specialist funds on the back of good short-term performance figures. Only one quarter later, these investors are likely to form the bulk of the casualties. Hendrik du Toit, managing director of Investec Asset Management, highlights the point that investors should not invest on the basis of short-term performance figures. Where are the funds now that advertised astronomical short-term returns not so long ago, he asks. Taking a long-term view is still the key to successful investing, advises Du Toit. As if to prove his point, the Investec Emerging Companies fund, which is found among the 25 worst-performing funds for the past quarter, ranks as the top fund, at 108%, for the three years ending September 30. Five of the 13 international funds are also among the top-performing 25 funds over three years, and so are the majority of the high income funds. The Investec Worldwide Fund, at 77.4%, and the Old Mutual Global Equity Fund, at 77.2%, took second and third place over three years. The Sanlam Mining and Resources Fund came last with a 23.4% loss, followed by the Standard Bank Gold Fund at a 20.9% loss, and the Sage Resources Fund with a fall of 18.3%. The unit trust quarterly performance figures may scare many investors, especially those new to the unit trust arena. But remember, equity unit trusts, like any share investments, are long-term holds of five years or more. The longer the holding period the less painful the market gyrations.
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