The MiPlan IP Enhanced Income raked up another accolade in the media when Citywire named it amongst one of only 9 funds to beat Inflation every year from 2018.
Even more pleasing for investors was the fact that Citywire highlighted that the “Mi-Plan IP Enhanced Income fund was noteworthy for not just for being the only two multi-asset income funds to appear” (in the 9 funds) but that it was “also the only two-unit trusts in South Africa to have delivered consistent inflation-beating returns going back seven years”.
The full article appears below written by Patrick Cairns:
According to Morningstar data, there are 1,136-unit trusts in South Africa with track records going back at least five years. But only nine of them – 0.8% – have outperformed inflation every calendar year from 2018.
This is a stunning statistic, made all the more remarkable by the fact that for four of the past five years, the annual consumer prices index (CPI) in South Africa was 4.6% or lower.
Last year’s inflation spike upset many track records. Even though South Africa’s CPI was relatively mild by global standards at 6.6%, this proved too much of a hurdle for many fund managers who had been consistently inflation-beating up to 2021.
It is also notable that three of the nine funds that surpassed CPI every year for the past five years are resource sector equity funds. Their performance is therefore due much more to particular market dynamics than to manager skill.
Of the remaining six, two are variable-term bond funds, two are multi-asset income funds, one is a short-term bond fund, and one is a multi-asset low equity portfolio.
| Unit trust performance | ||||||
|---|---|---|---|---|---|---|
| Annual returns | ||||||
| Fund | Category | 2018 | 2019 | 2020 | 2021 | 2022 |
| Nedgroup Investments Mining & Resource Fund R | SA Eq Resources | 9.4% | 40.7% | 20.1% | 42.8% | 21.8% |
| Momentum Resources fund A | SA Eq Resources | 6.6% | 10.4% | 25.2% | 28% | 18.5% |
| Coronation Resources fund P | SA Eq Resources | 7.7% | 35.4% | 30.3% | 53.1% | 16.2% |
| Amplify SCI Wealth Protector fund B5 | SA MA Low Equity | 8.8% | 13% | 10.1% | 12.9% | 10.7% |
| Oasis Bond fund D | SA IB Variable Term | 7.7% | 9.2% | 7.7% | 8.7% | 10.2% |
| Saffron BCI Active Bond fund A | SA IB Variable Term | 8% | 10.2% | 9.9% | 9% | 7.7% |
| Truffle SCI Income Plus fund A | SA IB Short Term | 11.3% | 10.7% | 6.2% | 7.5% | 7.5% |
| Ci Diversified Income fund A | SA MA Income | 8.7% | 8.5% | 6.8% | 5.8% | 7.3% |
| Mi-Plan IP Enhanced Income fund A1 | SA MA Income | 9.6% | 11.6% | 8.1% | 8% | 7.1% |
| SA CPI | 4.5% | 4.1% | 3.2% | 4.6% | 6.9% | |
Source: Morningstar & Citywire
It is interesting that the Amplify SCI Wealth Protector fund, managed by Citywire A-rated Iain Power at Truffle Asset Management, is the only multi-asset low equity portfolio that makes the list. One would expect more consistently defensive performance from funds in this category, yet this unit trust comfortably outperformed inflation each year.
The portfolio has delivered a return of at least CPI + 3.8% in each of the past five years. That is remarkable considering not a single one of its peers consistently achieved even a CPI target.
Truffle is the only manager responsible for more than one portfolio on the list. The Truffle SCI Income Plus fund managed by Hannes van der Westhuyzen and Palvi Kala is also the only fund in its category to have consistently outperformed inflation over the period.
Again, one might expect that more short-term bond funds would have managed to do so. This is, after all, a defensive category where volatility should be low.
And leading into last year, a number of funds in this category had been consistently inflation-beating going back as far as 2015. When inflation spiked in 2022, however, the Truffle SCI Income Plus fund’s 100% credit portfolio was one of only five of the 53 funds in this category to deliver returns ahead of CPI, and the only one able to maintain a long-term record in doing so.
Undone by 2022
A similar story played out in the interest-bearing variable term category. The majority of funds in this sector beat inflation every year between 2016 and 2021. Last year, however, the Oasis Bond fund managed by Adam Ebrahim and the Saffron BCI Active Bond fund managed by Brandon Quinn were the only two to do so.
Notably, with assets under management of R268m and R227m respectively, these portfolios are smaller than the median fund in the category.
The last two funds on the list – the Ci Diversified Income fund managed by Portfolio Analytics and the Mi-Plan IP Enhanced Income fund managed by Rowan Williams-Short at Vunani Fund Managers – are noteworthy not just for being the only two multi-asset income funds to appear. They are also the only two-unit trusts in South Africa to have delivered consistent inflation-beating returns going back seven years.
Both funds have outperformed CPI every year since 2016.
As with funds in the interest-beating categories, many multi-asset income funds had consistently outperformed inflation for long periods before 2022. In fact, there are 12 funds in this category that had beaten CPI for nine years in a row from 2013 to 2021.
However, last year derailed all of those track records.