The days when Australia “rode on the sheep’s back” may be long gone, but agriculture remains a critical component of the economy, generating valuable export income. While overseas investors understand its importance, for most local institutions it’s still a bridge too far.
For several years, investors, from institutional to retail, couldn’t get enough of the tech stocks with all their promises of future growth. But now the market has spoken and it’s saying precisely this – valuations matter again.
Best year in 25 for active Aussie equities managers
(Pictured: David Carruthers)
Active Australian equities managers added more value last year than they have for nearly 25 years, according to the latest survey results from Mercer Investments.
David Carruthers, a principal and global product manager at Mercer, said: “Not only did 2013 mark the second calendar year [in a row] of +20 per cent returns, but the average active Australian shares managers outperformed the market by 3.5 per cent – the best performance in almost 25 years. With the continuing rise in popularity of ETFs, active managers have put forward a strong case that they bring value, even after allowing for fees.”
The best before-fee returns tended to favour the value-orientated managers, but only slightly. Most managers seemed to revel in the conditions, especially long/short Aussie equities managers.
The Mercer median, with 139 Aussie equities funds in the survey, returned 23.2 per cent over the calendar year against the S&P/ASX 300’s 19.7 per cent. The median return for long/short managers was 24.8 per cent, for long-only managers was 23.5 per cent, for SRI managers 23.4 per cent, and for income-oriented managers 23.1 per cent.
Mercer said: “The median manager’s outperformance of the index by 3.5 per cent over the year is a significant improvement on 2011 and 2012 where active managers outperformed by +0.6 per cent. In comparison, an upper quartile manager would have returned more than +26.2 per cent, outperforming the index by 6.5 per cent for the year. Over five years, the upper quartile manager returned +14.5 per cent per annum, outperforming the index by 2.2 per cent.”
The top three funds on a risk/return-adjusted basis were the Perpetual Wholesale Ethical fund, the Perpetual Australian Shares composite and the Fidelity Australian Equities fund.
In contrast, global equities managers were only marginally ahead of the index, on average, before fees. The median return for global ex-Australia equities managers was 48.4 per cent (in $A terms) compared with the MSCI index’s 48.0 per cent. Once again, long/short managers performed best, with a median return of 54.8 per cent.
