This week's Raging Bull Awards make for an interesting study. Of particular interest is that Stanlib has pulled itself up by its socks to take the overall Raging Bull Award for the top unit trust management company for 2007, as well as nine other awards. This is no mean feat, which I do not think has been matched by any other unit trust management company in the 12-year history of the awards. As a management company, it had been languishing near the bottom of the pile for some years.
This does not mean that Stanlib's achievement is a flash in the pan.
To be awarded the Personal Finance/PlexCrown/ProfileData Raging Bull for the best management company means an asset management company must produce sustained good results based on standard risk measures, consistency measures and measures for downside risk and managerial skill with five-, three- and one-year periods taken into account.
It is this sustained, sound risk-adjusted performance that Personal Finance and its joint sponsors of the Raging Bulls, Plexus and ProfileData, are looking for in making the Raging Bull Awards.
There are more than enough awards for short-term, flash-in-the-pan success, where one company with one fund can lead the pack, but for one year only.
This can be achieved by taking a single, high-risk bet on the market. If it pays off, all is great. If it fails, no one really notices.
Asset management companies that balance risk against return and seek long-term, sound returns are the ones that you should be seeking as well.
I am proud to say that Personal Finance led the move away from pure performance-related unit trust comparative tables. Personal Finance was the first publication in this country to provide risk-adjusted comparative performances and has continued to lead in this field, assisted by our unit trust data providers, Plexus and Profile Data.
Changing climate
This year is going to be a real test for the asset management business. We have seen a dramatic fall-back in the FTSE/JSE All Share index. This week alone, we have seen the index going up and down like a yo-yo.
When markets add 25 percent a year, as they have for the previous five years, it is quite easy to keep investors happy.
The pure equity unit trust funds are the ones to watch when measuring how an asset manager is performing in times of stock market volatility.
For those investors who do not have the stomach for the ride there are absolute return funds. They aim at giving you real returns but do not guarantee those returns. They use other asset classes apart from equities to achieve their results.
Hard tests ahead
Paul Stewart, the managing director of Plexus, summed it up the awards ceremony in Cape Town on Wednesday night when he said: "After a number of years of high summer, times of abundance, the tide is now turning and autumn is upon us as an investment community.
"Will the winter be a cold and stormy affair, or will we get away with a few nasty squalls and a bit of wind damage?
"In these times, it takes women and men of great skill and courage to navigate the treacherous waters of a potential bear market. We will look forward to next year's Raging Bull Awards to see which management company and individual funds are going to be best able to deliver excellent real returns to its investors, notwithstanding the difficult conditions that may prevail during 2008.
"The inescapable fact is that the behaviour of financial institutions comes under scrutiny during the lean times and, as an industry, we will need to put our best foot forward. The bottom line is that we have an excellent industry with progressive thinking. It is well regulated and highly competitive. We have some of the best-run financial services companies in the world, who employ very responsible and highly skilled individuals to manage our investors' money.
"It is up to us collectively to ensure that those high standards are maintained and that our collective investment industry remains vibrant, respected and trusted by investors going forward."
I am sure he is right. The competition has been tough this year, with some very close results. There are a lot of fine asset managers out there who've not won awards but who year after year still turn in sound, sustainable results.
Personal Finance salutes those who won this year.