Masters Degrees (Business Management)

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Browsing Masters Degrees (Business Management) by Author "Brink, Margaretha Engela"

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    The performance of South African unit trusts for the period 1984 to 2003
    (Stellenbosch : Stellenbosch University, 2004-12) Brink, Margaretha Engela; Krige, N.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics.
    ENGLISH ABSTRACT: Many fund managers who are supposed to have your best interest at heart have become just as greedy, have vested interests and their performance has been mediocre. Until they clean up their act, your best bet is to opt for an index fund, or the type that uses our money to track a stock market index, provided the initial and ongoing costs are low if you invest in shares. A great many funds have been run well and conscientiously. However, it’s often not clear to individuals which ones these are. In the absence of clarity, those index funds that are very low-cost are investorfriendly by definition and are the best selection for most of those who wish to own equities. Warren Buffet Throughout the past twenty years, investment funds have been transforming financial markets. There has been a tremendous growth in this industry and at the end of 2003 more than USD 13 trillion were invested in investment funds around the globe. In the United States, 12 percent of all money invested in mutual funds resides in index mutual funds and investors can choose from 149 index funds. Academics have researched mutual funds in depth and most are in favour of index-related funds. The reason for this is that the average US mutual fund that is actively managed does not manage to outperform its benchmark index. In South Africa, the scenario is very different. There are currently only nine index unit trusts with a net asset value of ZAR 1.4 billion. This represents only 60 basis points of all money invested in South African unit trusts. In this study, a few factors are discussed as possible contributors to this situation, with exchange-traded funds and enhanced index fund strategies identified as the most significant factors. This study investigates whether active unit trusts succeed in outperforming their benchmark index. It provides empirical research showing that All-Share Index have been a better risk-adjusted investment over the twenty years studied. This may be seen as a reason why investors prefer enhanced strategies since they provide a premium on the index’s return, and the risk and costs are lower than for active unit trusts. Exchange-traded funds have accumulated investments of close to ZAR 6 billion since the launch of the first Satrix fund, Satrix 40, in 2001. These funds aim at the same return as index unit trusts and have significant cost advantages over index unit trusts.