EQUITY FUND MANAGERS
Questions raised over use of Alsi as benchmark
Some South African equities fund managers still use the JSE’s all-share index (Alsi) as a performance benchmark for their portfolios, although only six companies account for nearly half of its market capitalisation. At R4.6-trillion, tobacco manufacturer British American, miners BHP and Glencore, media conglomerate Naspers, luxury goods company Richemont and retailer Steinhoff accounted for 44% of the index’s value on Wednesday versus 47% in the previous year. As these companies are seen as rand hedges due to either being foreign companies or because of their exposure to offshore markets, questions have been raised about the index’s use as a benchmark for equity portfolios that have the majority of their holdings in companies without similar offshore exposure — and charging fees of up to 20% for beating the benchmark. "It is a bit questionable whether the JSE Alsi as well as the JSE Swix [shareholder-weighted index] are appropriate benchmarks to use as a tool to measure your portfol...
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