FundsData Online - South African Unit Trusts

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Benchmarks

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Benchmarks

A benchmark is something used as a standard or point of reference. Nearly all unit trusts 'benchmark' themselves against some appropriate standard in order to gauge performance. One reason for this is that a fund that is mandated to invest in, say, government bonds market cannot, obviously, perform better than the best performing government bond. If government bonds underperform the stock market by fifty percent, it would be unfair to compare the bond fund's performance to the stock market.

For the same reason, absolute performance (ie, real returns) is not always the most appropriate measure of a fund's performance. A fund that is mandated to remain fully invested in resources stocks, for example, will not be able to achieve a real return in the face of a major crash in resources shares. The fund manager in this situation will strive to keep losses to a minimum by increasing cash to the extent permitted and favouring less marginal resources shares. His level of success at protecting investors, however, should be judged in comparison to the resources shares in general, not some other asset class.

Nominated benchmarks

Each fund has a nominated benchmark which it uses for performance comparisons when producing its own fact sheets. Typical benchmarks are major stock market indices, average performance of the fund sector, or CPI (inflation). Some funds use composite benchmarks, such as 70% stock market index, 30% money market rate.

The fact sheets in FundsData Online include, by default, performance charts showing the fund against the fund's sector average. Using the Performance Calculator, it is also possible to compare a fund to a number of other benchmarks. This is useful if, for example, the fund has a composite benchmark and you would like see how the fund compares to its sector or inflation. Remember that it is important to choose appropriate benchmarks when comparing fund performance.

Other available benchmarks

The list below describes the benchmarks available in FundsData Online's Performance Calculator and various tools in the Toolbox. Be aware that not all benchmarks are appropriate comparisons for all funds. Take note that certain benchmarks (such as the Dax, the MSCI-USD and Topi) and calculated in foreign currencies and comparisons with rand-denominated funds are skewed by exchange rate fluctuations.

Code	Full Name	Description
ALSI	FTSE/JSE All Share Index	South African stock exchange
BIND	BEASSA All Bond Index	South African bond exchange
CPIX	CPI(X)	Consumer Price Index (inflation) excluding certain basket items
DAX-INDEX	DAX Index (Germany)	Index of shares listed on the German stock exchange
F100	FTSE 100 Index	Index of the top 100 shares listed on the London Stock Exchange
FINA	FTSE/JSE Financials Index	Index of the major financial shares listed on the JSE
FINU	FTSE/JSE Financials & Industrials Index	Index of the major financial and industrial shares listed on the JSE
FNCALLR	FNB Call Rate	FNB's overnight call rate
HCPI	Headline CPI	South African inflation rate
INDI	FTSE/JSE Industrials Index	Index of the major industrial shares listed on the JSE
MSCI-USD	MSCI World Index (US$)	Morgan Stanley index of world stock markets in US dollars
MSCI-ZAR	MSCI World Index (rands)	Morgan Stanley index of world stock markets in SA rands
REPO	Repo Rate	Repo rate as set by the South African central bank
RESO	FTSE/JSE Oil & Gas Index	Index of the major oil and gas shares listed on the JSE
SAPRIME	SA Prime Interest Rate	Prime lending rate in the SA market
SP500	S&P 500 Index	Standard & Poor's top 500 listed shares in the USA
TOPI	Topix Index (Japan)	A composite index of the shares listed on the First Section of the Tokyo Stock Exchange

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