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Volatility widens gap between share managers

30 October 2017 By Hannah Wootton



Volatility has contributed to a growing gap between winners and losers in the Australian shares manager sector, with the overall sector just coming out in front for the September sector, data from Mercer’s sector surveys shows.

Mercer’s September 2017 sector survey shows a significant difference in returns between the top and bottom performing Australian shares managers for the September quarter, suggesting that the gap between winners and losers in the sector is growing.

According to the Mercer survey, the top performing Australian shares manager in the year to September 2017 was Macquarie Australia Plus with a return of 26.75 per cent. It was followed by Macquarie High Conviction (19.26 per cent) and Allan Gray Australian Equity (18.92 per cent).

The worst performing Australian shares manager for the same time period was Hyperion Australian Growth, which had a negative return of -3.23 per cent. Jan Hen High Conviction Australian Equity had the next lowest returns, at -2.74 per cent. Arnhem Long Short Australian Equity rounded out the bottom three, recording returns of 0.92 per cent.

These results highlight a growing gap between top and bottom performing active shares managers. While some investors in active funds may have profited significantly, the large variations in return show that the gap between winners and losers is growing.

A principal in Mercer’s Manager Research group, Clare Armstrong, said that a hugely volatile reporting season contributed to the widening range of outcomes for investors in the sector.

“We believe that investing with a high conviction approach is rewarding but investors must understand that it can be volatile, with the strongest and the weakest strategies within the Australian shares (long only) universe over the year to September, both investing with conviction in concentrated portfolios,” she said.

The median Australian shares manager managed to stay slightly in front over the last quarter, finishing up 0.9 per cent for the quarter and up 9.6 per cent over the year. Over the longer term periods of three and five years, the median manager has outperformed by 1.1 per cent and 1.7 per cent respectively.

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