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Understanding Fund Performance

Are unit trust performance awards worth the paper they’re printed on?

Eamonn Ryan




Performance tables of unit trusts should always come with a caveat: few are comparable as each set of awards has different criteria, some of which are so specialised as to be almost meaningless. Candice Paine, head of retail at Sanlam Investment Management, challenges one myth in retail investing, that if you invest with an award-winning fund manager you are assured of top performance.

Paine claims there are many different awards with widely differing criteria. “Some of them will be a mystery to the average retail investor,” she says. More importantly, it sometimes happens that the same fund management company may simultaneously manage both a top performing fund and a worst performing one. Especially with specialist funds, they each have particular cycles.

“An individual fund award doesn’t necessarily mean other funds managed by the same fund management house will be top, or that the same fund will continue to be top quarter after quarter. You need to research for yourself what the award was for – taking particular notice of the performance period and how risk is calibrated. You may be surprised at some of the criteria applied to fund performance,” says Paine. Paine also recommends that investors not be blindly brand loyal when it comes to choosing unit trust investments as this may not always be an accurate reflection of consistent performance.

Who’s done what?

Last year saw a return to the bull market, though few analysts were willing to call it such. According to Plexus, for the 12 months to December 2009, the RMB Resources Fund topped the charts with a return of 53,6%, followed by the PSG Alphen Growth Fund, up 43,5%. Worst performance came from the Investment Solutions US Dollar Cash Feeder Fund, with a negative 21,3%, as local investors were squeezed by the rand’s strength.

Over three years the Cadiz Equity Ladder is the best performer, up 22,2% a year, and over five years it’s resources again, this time the Old Mutual Mining and Resources Fund with an annualised return of 29,2%. In the most recent results for the 12 months to April 2010, Prieur du Plessis, Plexus group chairman, says the best-performing sectors were the Domestic Equity – Financial and Domestic Equity Value sectors with 55,7% and 52,3% respectively. As was the case over the quarter, the worst-performing sectors over the 12-month period were the Foreign Fixed Interest – Varied Specialist and the Foreign Fixed Interest – Bond categories with returns of –18,5% and –10,7% respectively.

The three-year and five-year charts are topped by the Domestic Fixed Interest – Money Market and Domestic Equity – Resources & Basic Industries sectors with 9,9% and 22,9% per annum. The best-performing fund over the last quarter was the Grindrod Global Property Income Fund with a return of 11,9%, followed by the Coronation Financial Fund with 11,7%. The worst fund over this period was the Prescient Global Income Feeder Fund A1 with -7,4%.

The best kept secret in successful investing

The best-performing fund over the last 12 months was the RMB Small/Mid-Cap Fund A with a return of 63,8%. Over the last three years it was the Cadiz Equity Ladder Fund with an annual 19,4%, and over the last five years the Old Mutual Mining & Resources Fund A with an annual 26,5%.  Most investors focus on whether or not their portfolio has appreciated. But capital appreciation is only the second most important rule of investing. Capital preservation is the first.

When looking at a fund’s track record it’s important to examine its performance both when the stock market produced positive returns (bull markets) and when it produced negative returns (bear markets).  This is because preserving capital in bear markets is an essential contributor to long-term performance. Delphine Govender, portfolio manager at Allan Gray, says: “Recovering from a loss is much harder than investors realise.  Not only does it take time, it takes an exponentially greater return.”

For example, a 10% loss requires an 11,11% gain to break even; a 50% loss requires a 100% gain to break even and a loss of 70% requires a 300% gain to break even. One consistently top fund manager is Allan Gray. Its Equity fund was launched in October 1998 and since then, up until the end of March this year, the market has gone through 84 ‘up’ months and 54 ‘down’ months. During the 54 down months, the ALSI produced an average monthly return of -3,9%, whereas the Fund’s average monthly return was -1,7%. How was this achieved? Govender says that contrarian value-based investors like Allan Gray always invest with a margin of safety. They first estimate the company’s intrinsic value and then look to invest in those companies whose intrinsic value is greater than the current price attributed by the market. This difference between value and price is the margin of safety.

Raging Bull awards – top fund managers for the year, as rated by PlexCrown:

Domestic management company of the year

The South African-domiciled management company with the best overall performance across sectors consisting of a suite of five or more rand-denominated funds with at least three years’ history:

  1. Allan Gray
  2. Prudential
  3. Nedgroup Investments

Offshore management company of the year
Stanlib Multi-Manager was recognised as the overseas-domiciled management company with the best overall performance across sectors consisting of a suite of five or more non-rand-denominated funds with at least three years’ history.

  • Best Broad-Based Domestic Equity Fund: Absa Select Equity Fund
  • Best Domestic Fixed Interest Fund: Stanlib Cash Plus Fund
  • Best Foreign (South African-Domiciled) Equity Fund: Allan Gray-Orbis Global Equity Feeder Fund
  • Best Offshore Global Equity Fund: RE•CM Global Fund
  • Best Domestic Asset Allocation Flexible Fund:Rezco Value Trend Fund
  • Best Domestic Asset Allocation Prudential Fund: Allan Gray Balanced Fund
  • Best Domestic General Equity Fund: Absa Select Equity Fund
  • Best Offshore Global Asset Allocation Fund: Ashburton Replica Euro Asset Allocation Management Fund

Top outright performers over three years

  • Best Domestic Equity General Fund: Absa Select Equity Fund
  • Best Domestic Equity Growth Fund: RMB Strategic Opportunities Fund (A)
  • Best Domestic Equity Industrial Fund: Stanlib Industrial Fund (A)
  • Best Domestic Equity Financial Fund: Stanlib Financials Fund
  • Best Domestic Equity Resources & Basic Industries Fund: Old Mutual Mining And Resources Fund (R)
  • Best Domestic Equity Smaller Companies Fund:RMB Small Mid-Cap Fund
  • Best Domestic Equity Value Fund: Nedgroup Investment Value Fund (A)
  • Best Domestic Asset Allocation Flexible Fund: Bluealpha All Seasons Fund
  • Best Domestic Asset Allocation Prudential Fund: Dotport Stable Prudential Fund of Funds
  • Best Domestic Fixed Interest Bond Fund: Oasis Bond Fund
  • Best Domestic Fixed Interest Income Fund: Stanlib Cash Plus Fund
  • Best Domestic Real Estate Fund: Stanlib Property Income Fund

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

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(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you want to wow potential investors, you need to cover your bases.

Matthew McCreary




If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7 breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

  1. The vision, where you concisely explain your idea.
  2. The problem. Why is your vision necessary or helpful?
  3. The opportunity. What is the market size, and how can you position yourself to earn a share of it?

Related: How To Pitch Your Business, Product Or Idea To Industry Experts

This is just the start, though. Check out the infographic below to see the rest of the slides you need when pitching investors.


This article was originally posted here on

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‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Is your business worthy of fame? If so, pay attention to what the Sharks have to say …

Eric 'ERock' Christopher



Shark Tank

Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

  • Charles Barkley, Hall of Fame NBA star and TV analyst
  • Alex Rodriguez, legendary baseball player and businessman
  • Rohan Oza, an iconic brand builder and marketing expert
  • Sara Blakely, founder and owner of SPANX brand
  • Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins
  • Bethenny Frankel, TV celebrity, author, and founder of Skinnygirl brand
  • Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

Related: 6 Great Tips For A Successful Shark Tank Pitch

2. Leverage social media marketing


During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

These are wise words from one of the world’s few billionaires.

This article was originally posted here on

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The Best Way To Get Your Teenager To Start Investing Right Now

Jeff Rose advises a young fan on where to start his investment journey.




In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.

Related: Making International Investing Simple And Transparent – CybiWealth Digital Platform

Click on the video to hear more tips for a younger investor.

This article was originally posted here on

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