Picture: ISTOCK
Picture: ISTOCK

Boutique unit trust fund manager Fairtree Capital is top of the latest Morningstar survey of asset managers, beating favourites Allan Gray, Coronation, Foord and Investec.

This is the second quarter Fairtree has led the manager rankings since it qualified for inclusion in the survey at the end of the previous quarter, says Matthew Mellors, head of business operations at Morningstar.

The survey ranks managers on the basis of the Morningstar "star" ratings achieved by all their qualifying funds.

Rankings on risk-adjusted returns take into account not just the returns a fund achieved relative to its peers or a benchmark, but also the risk the fund took to achieve those returns relative to the other funds in the same subcategory.

If a manager has at least R5-billion under management and three funds with star ratings, it is included in the manager survey. To determine the average rating for a manager, the ratings for each fund in the manager's suite of funds is averaged either on an equal weighting or on a weighting based on the assets under management in each fund relative to others in the manager's stable.

When the average ratings based on performance to December 31 2017 are calculated on an equal weighting, Allan Gray is in the lead, but on an asset-weighting basis, Fairtree is first.


Prudential Fund Managers is third on both averages and Coronation is fourth on the equally weighted average rating and sixth on the asset-weighted one. Investec is ranked 16th on the asset-weighted rating and 24th on the equally weighted rating, while Foord is ranked 23rd and 18th respectively on the two measures.

Fairtree's Equity Fund is leading some 97 funds in the South African equity general unit trust subcategory over five years on straight performance with an annual return of 17.21% a year for the year to the end of December, according to Morningstar.

There have been some quite dramatic swings in the rankings in the manager survey over the past few quarters. One of these has seen Foord move from the top of the rankings to the lower half.

Mellors says 18 months ago Foord's six qualifying funds all achieved four- or five-star ratings. Now only its worldwide multiasset Flexible Fund of Funds and International Feeder Fund (a global multiasset flexible fund) have achieved four stars, its Balanced, Equity and Global Equity Feeder funds achieved three stars each and its multiasset medium equity Conservative Fund achieved two stars.

Mellors says the flow of investor money into funds shows investors are chasing the top performers. Fairtree, for example, has had net inflows while Investec and Foord have had net outflows.