2021: A bumper year for local unit trusts


For the five years from the start of 2016 to the end of 2020, the average return from all South African domiciled unit trusts was just 4.8%. Last year, it jumped to 18.7%.

While this headline figure is really only of academic interest, since it includes everything from money market to global equity funds, it does illustrate how much better returns in general were for local investors in 2021.

Last year, just 10 unit trusts out of a universe of 1,284 delivered a negative return, according to Morningstar. At the same time, 545 funds – 42.5% – returned more than 20%.

By comparison, just 68 of 1,088 funds – 6% – of funds gained more than 20% in 2019. That was the previous best year for local unit trusts since 2014.

The magnitude of the change in fortunes is perhaps best illustrated by the performance of funds in the Asisa South Africa multi-asset high equity category.

Over the previous five years, the average annualised return from these portfolios was just 4.4%, according to Morningstar. In 2021, however, they delivered an average growth of 20.4%. All but six of the 210 funds in this category were up more than 10% last year.

Strength on the JSE
The significant difference has been in the returns available from the local stock market.

Between 2016 and 2020, the average annualised return from unit trusts in the Asisa South Africa equity general category was just 3.5%. Over that period, the best year for these funds was in 2017 when they grew by an average of 13.2%.

In 2021, the average gain for local equity funds was more than double that, at 27.3%.

There are now 34 local equity funds with annualised five year returns of 10% or better. That is 28% of the unit trusts with track records this long.

Conversely, at the end of last year, only four funds in the South Africa equity general category were showing annualised five year returns of 10% or better. Two of those were index trackers, tracking the FTSE/JSE Dividend Plus index.

Even South African multi-asset income funds had a better year in 2021 than perhaps many were expecting. After average returns of 6% in 2020, funds in this category returned on average 6.6% last year.

That is below the strong performance in years like 2019 and 2016, but is not significantly below the five-year average annualised return of 7.3% for these portfolios.

Notably, 19 of the 109 funds in this category – 17.4% – returned 8% or more last year. That is in line with this category’s five-year numbers. For that period, 13 of 69 funds – 18.8% – show annualised returns of 8% or more.

There were also continued strong gains for local bond funds, with unit trusts in the South Africa interest-bearing variable term category up 9% on average in 2021. This was slightly ahead of the returns from recent years.

The average annualised five year return for these portfolios has been 8.3%.