By Robert Laing, Business Day Live
Picture: MICHAEL ETTERSHANK
BLESSED with hindsight, the best place to have kept your money last year was in offshore funds due to the rand’s continued weakening against the dollar, pound and euro.
But due to most stock markets ending 2015 nearly where they started measured in their domestic currencies, you would have generally done better keeping your money in an offshore savings account than in foreign shares.
Looking at how the JSE’s range of exchange-traded products performed over the past year — and these have grown to give a fairly comprehensive comparison of how different geographic regions, industry sectors and asset classes performed against each other — shows the top 20 best performer list was dominated by funds offering local retail investors ways to keep money offshore without the red tape required to open foreign stockbroking or savings accounts.
Interestingly, Absa Capital’s NewWave branded exchange-traded notes, which enable JSE investors to keep their savings in US or UK money market accounts, beat the total returns of both Deutsche Bank’s and BNP Paribas’s equity funds in the corresponding regions.
The exception was the euro zone, where BNP Paribas’s Guru-branded Europe exchange-traded note was last year’s second-best performer with a total return of 36.54%, beating Deutsche Bank’s Dow Jones Eurostoxx 50 index tracking exchange-traded fund, which returned 23.68%, and outpacing Absa Capital’s NewWave euro exchange-traded note’s 21.31% return.
When it came to the US, however, Absa Capital’s dollar money market product ranked third with a 34.86% return, beating Deutsche Bank’s MSCI USA tracker’s 33.8% and BNP Paribas’s US exchange-traded note’s 33.04% return.
Similarly in the UK, keeping your money in a British savings account via Absa Capital’s NewWave pound sterling exchange-traded note would have grown it 28.9%, beating the 24.04% return of the London Stock Exchange’s FTSE 100 as tracked in rands by Deutsche Bank’s JSE-listed UK exchange-traded fund.
Last year’s best performer was Japan thanks to "Abenomics" — Prime Minister Shinzo Abe’s policies that have succeeded in making Japan competitive again, spurring a bull run on the Tokyo Stock Exchange. Deutsche Bank’s MSCI Japan index tracking exchange-traded fund was the JSE’s top performing exchange-traded product, with a 42.82% total return.
While gold had another dismal year measured in dollars, its rand price performed better than even the JSE’s best-performing sector, industrials. Standard Bank’s physical gold owning exchange-traded fund AfricaGold returned 19.29%, placing it a fraction ahead of Absa Capital’s NewGold exchange-traded fund, which gained 19.26% over the year.
Standard Bank also offers a gold exchange-traded note that should in theory be more efficient than the physical gold-owning exchange-traded funds that carry the expense of storing and guarding bullion in a vault. Standard Bank’s gold-linker — which synthetically tracks the gold price by trading rolling futures contracts — returned 18.75%.
The JSE’s most disastrous exchange-traded product to have owned in the past year was an Investec exchange-traded note that exposes domestic investors to the dollar price of gold. The double whammy of a weakening rand and falling dollar gold price caused its value to plunge 99.1% over the year.
The JSE’s resources shares had another awful year, with the Satrix Resi, which tracks the JSE’s 10 biggest resources shares, losing 36.76%, making it the exchange’s second-worst-performing exchange-traded product for the year.
The only JSE sector tracker to make it into the top 20 best performing exchange-traded products was Satrix Indi, which tracks the JSE/FTSE industrial 25 index. It returned 17.02% over last year.
Of the numerous competing top 40 index tracking exchange-traded products available, RMB’s did best with a total return of 7.62% at year-end, followed by Investec’s 7.51%, and Stanlib’s 7.18%, while Satrix top 40 returned 6.74%.
With the exception of gold and silver, betting on commodity prices via exchange-traded products was fairly disastrous last year.
Standard Bank’s West Texas Intermediary crude oil price tracker fell 18.32%. Standard Bank’s palladium-linker exchange-traded note lost 11.27%, doing worse than Absa Capital’s physical palladium owning exchange-traded fund, which fell 10.35%, and Standard Bank’s physical palladium exchange-traded fund AfricaPalladium, which fell 8.34%.
One of the differences between exchange-traded funds and exchange-traded notes is that the former can be purchased and held in the tax-free savings accounts enabled by legislation enacted last year. If you have not yet gone to the website of your bank’s stockbroking arm to open such an account, that is probably a good New Year’s resolution.