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ZSE bull run boon for fund managers

The bull run experienced on the Zimbabwe Stock Exchange (ZSE) since the beginning of the year has been a boon for fund managers and their clients, who have received a boost on their investment portfolios, with performance moving into positive territory this year.

By Clive Mphambela

A recent survey report by Marsh Employee Benefits Zimbabwe shows that some of the fund managers who recorded significant portfolio recovery since the beginning of the year are Imara Asset Management, which delivered a non-annualised return on its discretionary mandates of 18,75%, becoming the country’s top fund manager for the first quarter of 2013.

Tetrad Asset Management was the second best performing fund manager, with a return of 14,135%, while Kingdom and ABC asset managers also joined top ranks, chalking up cumulative returns of 12,71% and 12,45% respectively during the review period.

Datvest Asset Management, a division of ZSE listed financial services group, CBZ Holdings Ltd, came in fifth with a portfolio return of 10,71%. Old Mutual Investment Group (OMIG) recorded just over 10% yield on its discretionary portfolios.

The Marsh survey has been done every quarter since 2009 with the latest results showing fund manager performances to March 2013.

It covered 11 registered asset managers: Imara, OMIG, Datvest, ABC, Tetrad, Platinum, Kingdom, Zimnat, Alpha, Ecobank and ZB Asset Management. There are 16 registered asset managers but five companies did not participate in the survey.

Performance surveys are a useful tool to benchmark and review peer fund managers by members of the public and users of professional fund management services such as pension funds. However, Marsh cautioned investors saying the past performance was not an indicator of future performance.

The ZSE benchmark industrial index gained 22,76% by end of the first quarter of this year which is the review period for this survey. As of Tuesday this week, the mainstream Index had risen to 220,13 points, with a year to date gain of over 46% from the December close of 149,79 points.

Fund managers who recorded significant growth on their discretionary balanced portfolios are those that have a relatively large proportion of equities of at least 30% of total assets in their portfolio.
A full discretionary mandate gives the fund manager the sole responsibility for defining the investment strategy and asset allocation parameters for the client’s portfolio.

Datvest Asset Management this week said investors sometimes punish their own efforts by having shorter-term investment horizons than the market is able to generally reward.

Datvest said in bear markets such as the one that characterised the ZSE’s performance over the two and a half-year period spanning the beginning of 2010 to mid-2012, it was normal
for investors to adopt defensive tactics.

“When one looks at the pain endured on our local bourse for the two and a half-year period spanning 2010 to mid 2012, the long and short of it is that it was a disaster. Equities defied fundamentals of a gradually improving economy. Even the justification of liquidity shortage became difficult in motivating an investment case for stocks. The long-term view approach also had very few takers, if any at all,” Datvest said. To offshore investors, the ZSE was viewed as a riskier market without the commensurate high returns. Other developed fairly stable markets could support exploring than venturing into a frontier market on the pretext of the economy being a recovery play.”
Datvest said the past eight months offered equity investors something to smile about; renewed hope.

Although market gains were driven largely by a few counters, returns were significant and no small change in hard currency, the asset manager said.

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