Leader of the pack – Unit trust performance review over the past decade

Regardless of what individuals are saving for, one of the most important factors for any investment is the investment’s time frame. In a recent Moneyweb article, Patrick Cairns poses the question “Which funds stand out over the long term?”

“Of the 418 funds available to retail investors with track records of longer than a decade, only one produced a negative return to the end of 2019. Only 11 failed to outperform inflation. Notably, this includes money market funds,” Cairns shares. He further points out that the record is even better over 25 years. “Every one of the 23 unit trusts with a track record that long beat inflation by at least 2.5% per year. More than half of them outperformed inflation by more than 4% on an annualised basis,” he mentions.

In his analysis he compared the current list with the list that was published two years ago. “To the end of 2017, only one global equity fund was amongst the top 20 performers over 10 years. Over that period, 13 of the top 20 were property funds. There is not a single one of those left today,” he remarks. The analysis also shows that only three funds appear on both lists: the Old Mutual Global Equity Fund, the Nedgroup Investments Financials Fund and the Coronation Industrial Fund.

According to Cairns, this shows that, even when looking over the long term, the performance of different regions and market sectors can shift significantly. Just because local real estate had performed so strongly to the end of 2017 was no guarantee that it would continue to do so. He shares that the FTSE/JSE SA Listed Property Index has fallen nearly 13% over the last two years.

According to Cairns, the best strategy remains a diversified approach that gives you exposure to different sources of return so you can feel comfortable remaining invested over the long term.

Click here to access the Moneyweb article where he further unpacks some of the funds and also shares the top performers.

In a similar article, Cairns also recently shared the best and worst performing unit trusts of 2019 – click here to access.

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