By John Collett
A swag of top-performing Australian share managed funds have boasted a return of more than 25 per cent for the year to June 30, compared to the broader Australian sharemarket’s return of 11.9 per cent.
Mercer’s latest report on managed funds that invest in Australian shares shows the Glenmore Australian Equities Fund was the best performer for the year to June 30, with a return of 31.5 per cent.
Robert Gregory of Glenmore Asset Management. The fund was the best performer over the past 12 months to June 30, according to Mercer.Credit: Eamon Gallagher
The fund is also ranked first over three years, with an average annual compound return of 17.2 per cent.
Outstanding performers for the fund include MMA Offshore, which owns vessels that it charters to the offshore energy sector, and which was recently bought by Singapore-based Cyan Renewables and delisted.
The fund has also done well from its holding in GQG Partners – a US-based fund manager of global and emerging market equities.
ECP Asset Management All Cap fund is in second spot, with a return of 29.1 per cent and 12.4 per cent over three years. The fund has also done particularly well from its holdings in GQG Partners along with Hub24, a technology provider to the wealth industry.
Smallco Broadcap Fund is in third with 26.2 per cent and 13.1 per cent over three years. The fund has a significant bias to small and mid-capitalisation companies.
However, picking a winning fund manager is difficult for small investors, as one day a fund manager can be the top of the pops only to feature at the wrong end of performance tables within a few years.
The Mercer performance league tables show that Australian share funds with a ‘long-only’ strategy, for the year to June 30 produced a median, or typical, return of 12 per cent. However, the market, as represented by the S&P/ASX 300 accumulation index, returned 11.9 per cent over the same period.
Over five years to June 30, the typical fund manager performed a little better with an average annual compound return of 8.3 per cent, compared to 7.2 for the market.
However, the median performance of funds investing in Australian shares is, in the pockets of investors, worse than that, as the Mercer figures do not take into account the fees paid to the fund manager by investors, says Chris Brycki, founder of online investment adviser Stockspot.
The figures also do not take account of the active managers’ turnover of stocks in their portfolios and how that negatively affects after-tax returns, Brycki says.
“Some investors like to believe that they can pick a winning manager - particularly those who are not familiar with the data that shows just how difficult it is,” Brycki says.
Greater numbers of investors are opting to buy the returns of the market - “passive” investing - as evidenced by the growth in the money held by investors in Australian-listed exchange-traded funds (ETFs), which recently surpassed $200 billion, from $50 billion in 2019.
Units in ETFs are bought on sharemarkets just like shares in companies, and their unit prices rise and fall in line with the market being tracked.
Most ETFs track or mirror the returns of a market, whether it is a benchmark sharemarket index, sub-index or the price of a particular commodity, or precious metal such as gold or invest in global themes, such as cybersecurity.
Shannon Reilly, head of equities, Pacific, at Mercer, says while there are healthy returns to be made with active managers, particularly those that invest in Australian shares, passive investing can also be an “appropriate solution” for investors as well.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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