The sprinters, pedestrians and tumblers of asset classes

After four exceptional years in which all asset classes delivered positive returns for SA investors, 2015 carried in the first underdog in a while: SA bonds, which tumbled by 3.93% over the calendar year. The top performing asset class for 2015 was Foreign Equity (32.7%), with Foreign Bonds trailing only slightly behind at 30.4%.

Like several other commodity-exporting emerging market countries, SA and its currency have been hit by continued commodity price weakness throughout the year. The expectation of and eventual realisation of the Fed's first interest rate hike since 2006 and China's slowdown contributed further to the weakening of the rand.

Looking at the performance in the SA market in greater detail, it's clear the year was dominated by the global ASISA categories, driven by the falling rand. Within the global grouping, Real Estate was the top-performing sector over the one-year period to end December 2015.

Looking at the South African equity categories, all posted positive returns for the year, except the Resources category, with Industrials finishing the year as the best performing within the category, followed by the Real Estate sector (which was the top performer for 2014 too).

The category that saw the most inflows in 2015, the Multi Asset category, saw its sub-categories Multi Asset High Equity, Low Equity and Medium Equity crossing the finishing line within a stride or two of one another.

The Value and Growth styles take turns to lead the investment pack, with each stage of their cycle normally lasting two to three years. Since September 2011, however, the MSCI SA Value Index has underperformed the MSCI SA Growth Index - the longest run of underperformance since 1997. 2015 saw a continuation of the underperformance of the Value style, a feature of the bull market during the time. The Growth and Momentum factors ended the year on top, maintaining their positions for 2014.

In light of the currency depreciation of the rand, predictably, almost all of the top performing funds for 2015 are global equity funds, with a selection of flexible funds, property funds and one income fund. However, most of these funds delivered very little performance above that gained by currency movements. Looking at the performance of the funds in dollar terms further highlights this.

The below table lists the 15 top performing South African-domiciled unit trusts for the year to the end of December - both in rand and dollar terms:

We look forward to seeing who the long-term winners over the next few years will be. In the meantime, we recommend that clients stick to the type of investment most appropriate for their risk profile and investment goal. This year's winners are often next year's losers. In the end, it is endurance that matters.