Double the index: A tale of two funds over two decades

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The long-term reward for staying invested in the fund has also been exceptional. (Image: Supplied)
The long-term reward for staying invested in the fund has also been exceptional. (Image: Supplied)

Coronation Top 20 and Coronation Optimum Growth funds turned 20 and 21 respectively in 2020. And there is much to celebrate for investors who have been invested in them since inception, as both have at least doubled their respective index returns since launch.

Top 20: 20 of Coronation’s best ideas on the JSE

Since 2000, Top 20 fund has offered investors an actively-managed, concentrated portfolio of what Coronation believes to be the best oppor­tunities on the JSE. Because it holds no more than 20 stocks, its potential to outperform the index through disciplined stock selection is greater, but with that comes lumpy returns over the shorter term. An investor’s reward is, however, exceptional wealth creation in the long run:

R100 000 invested in Top 20 at launch 20 years ago would have grown to more than R2 million at the end of September 2020 – after all fees. This is double the return of its benchmark index (Figure 1).

Figure 1.

According to Neville Chester, portfolio manager of Top 20 since 2007, the fund’s success is a direct result of leveraging the in-depth, proprietary research of Coronation’s investment team. “It’s the application of our intensive, long-term focused approach that has been crucial in consistently identifying under­valued ideas for the fund over the past 20 years.”

Optimum growth: Blending Coronation’s best ideas from across the globe

In 1999, Coronation pioneered the worldwide flexible mandate by launching Optimum Growth. The fund provides investors with a long-term portfolio of the best investment ideas Coronation can find around the world, while aiming to deliver healthy long-term real returns.

The fund is unconstrained, so it can invest anywhere in the world and across all available listed asset classes. Its investors therefore benefit from Coronation’s full global research effort, comprising 70 investment professionals, across all the investable asset classes.

The long-term reward for staying invested in the fund has also been exceptional. It has outperformed global equities (as measured by the MSCI World Index) by 4.6% p.a. since inception. The result is a current investment value of more than double the index (Figure 2). And given the fund’s wide diversification, this performance was delivered with significantly less volatility than that of the index.

Figure 2

Can this performance be repeated over the next two decades?

“Besides being a well-resourced and expe­rienced team by global standards, our knowledge of global stocks has continued to increase year after year, which places Optimum Growth in a strong position to continue to deliver attractive risk-adjusted returns for its investors.” says Gavin Joubert, a manager of Optimum Growth since 2005.

In terms of Top 20, Chester adds that the same factors that have driven the fund’s remark­able performance remain in place at Coronation. “Today, we are as excited as we have ever been about the opportunities that are available in the market and that we are currently taking advantage of in the fund.”

For more information on investing with Coronation, click hereThe information contained in this article is not based on the individual financial needs of any specific investor. Reference to specific funds should be read in conjunction with the Minimum Disclosure Documents available here. To find out more, speak to your financial adviser. 

Coronation is an authorised financial services provider.

This post and content is sponsored, written and provided by Coronation.

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