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We take a look at one of South Africa's most well known asset/fund managers, Cornation Fund Managers' share price performance and compared it to that of the overall JSE all share index.
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So why compare Coronation's share price to the overall market?
Readers might be wondering why are comparing Coronation fund managers share price to that of the overall JSE All Share Index? Well, the fortunes of Coronation is very tighyly linked to the fortunes of the stock market. The stronger the stock market, the higher the returns of their funds, and by virtue of that the higher the performance fees earned from their range of funds they offer. But in the good times share prices of companies such as Coronation will rise more than the market, and in the bad times companies such as Coronation will fall more than the market. That is because of a multiplier effect. As the market goes up they earn more in fees, and the higher the market goes, the ever higher the percentage of performance fees goes. But when the markets are negative, those compounding effects of ever higher markets and returns disappear and Coronation has to rely on recurring income instead. Recurring income looks at income earned regardless of market performance. So that would be monthly administrative fees etc that they earn from funds under their management. Below an interactive graphic showing the share price of Coronation for the last month, readers can select the time period they want (up to 4 years back), or readers can select one of our predetermined time periods which include:
As soon as readers click on "JSE All Share" in the top left, the chart will show the returns in percent at the top of the graphic for both Coronation and the JSE All Share index, for whichever period the reader selects or provides to the graphic.
- 1 Month
- 1 Year (so basically the last 12 months)
- YTD (Year to date. So from 1 Jan 2018) to the latest date
- MAX, which in this case is the last 4 years.
As soon as readers click on "JSE All Share" in the top left, the chart will show the returns in percent at the top of the graphic for both Coronation and the JSE All Share index, for whichever period the reader selects or provides to the graphic.
While the JSE All Share index declined by -8.74% over the last month, the share price of Coronation was hammered a lot harder and lost 17.15% of its value over the same time period that the market lost 8.74%.
Over the last 12 months, the JSE All Share Index declined by -14.76%, while Coronation has declined by almost 3 times that, with it losing -42.5% over the same time period. When taking an even longer view, that of 4 years the picture gets even worse for poor old Coronation. Over the last 4 years the JSE All share managed to squeeze out a small gain of 2.24%, while over the same time period Coronation's share price declined by -53.25%. These results show just how hard a company like Coronation gets hit when the market turns red. The image below shows the returns over the last 4 years for both Coronation and the All Share Index
Over the last 12 months, the JSE All Share Index declined by -14.76%, while Coronation has declined by almost 3 times that, with it losing -42.5% over the same time period. When taking an even longer view, that of 4 years the picture gets even worse for poor old Coronation. Over the last 4 years the JSE All share managed to squeeze out a small gain of 2.24%, while over the same time period Coronation's share price declined by -53.25%. These results show just how hard a company like Coronation gets hit when the market turns red. The image below shows the returns over the last 4 years for both Coronation and the All Share Index
So Coronation will need to ensure their recurring income makes up a larger chunk of their overall income earned, in order to lessen the volatility brought about in share price due to market movements. How much money does Coronation have under their management you might ask? The summary shows the total assets under management for the last couple of quarters as announced by Coronation:
- September 2017: R614 billion
- December 2018: R616 billion
- March 2018: R588 billion
- June 2018: R602 billion
- September 2018: R587 billion