Despite concerns about a new Covid-19 variant and an upward shift in structural inflation, 2021 proved to be a good year for growth assets – most notably equities and property.
The pandemic once again dominated headlines as global case numbers more than tripled through the year to around 300 million. While the emergence of the Omicron variant initially weighed on risk sentiment, optimism soon returned on expectations that Covid-19 would move from a pandemic to a more manageable endemic state.
Meanwhile, it became clear that inflation was stickier than initially thought, and investors began preparing for higher interest rates and the end of the US Federal Reserve’s stimulus programme.
Against this backdrop, we saw a large divergence in equity market returns across the globe.
Developed markets delivered strong returns of 32% in rand terms, while returns in emerging markets were muted as China delivered just 6% for the year. Concerns around cross-border regulations, and a crackdown on Chinese tech giants, dented investor confidence in the world’s second-largest economy.
However, South Africa bucked the emerging-market trend. Domestic equities posted returns of over 30%, despite a poor performance by index-heavyweights Naspers and Prosus. Richemont was a standout performer as luxury goods sales remained buoyant.
Covid-19 case numbers in South Africa tripled to around 3 million by the end of the year. The rand weakened by 8% though 2021, in line with most of the currency’s emerging market peers.
For the year ended 2021 the CoreShares S&P SA Top 50 ETF and Tracker Fund (UT) returned a solid 30.27% and 30.15% respectively. Over the period a large percentage of the funds’ performance was driven by the large dual listed counters (Richemont, Anglo America and BHP Group) against the backdrop of strong global equity returns and a weakening Rand to the US Dollar (- 7.97%). The CoreShares S&P SA 50 Funds outperformed the (ASISA) South Africa General Equity Peer Group, +26.42% and the FTSE/JSE Top 40 Index, +28.4%. The outperformance relative to the Top 40 Index was largely driven by the lower average weight in Naspers (8.5% vs 13.28%) over the period. The lower weight a function to the capping rule of 10% imposed in the CoreShares SA Top 50 funds.
Sector Level Return Attribution:
Top 3 contribution to return
| Sector | Weight | Return Contribution | Absolute return |
| Materials | 38.5% | 11.6% | 30.1% |
| Consumer Discretionary | 27.5% | 6.5% | 23.5% |
| Financials | 18.2% | 5.2% | 28.3% |
Top 3 return detraction:
| Sector | Weight | Return Contribution | Absolute return |
| Real Estate | 1.4% | 0.4% | 27% |
| Energy | 0.7% | 0.4% | 54% |
| Industrials | 1.0% | 0.2% | 25% |
Source: CoreShares Asset Management, Bloomberg LLC, Morningstar. All returns are in ZAR for the year ended 31 December 2021. Past Performance is not indicative of future performance.
Share Level Return Attribution:
Top 5 contribution to return
| Average Weight | Contribution to Return (%) | Total Return (%) | |
| FINANCIERE RICHEMONT-DEP REC | 9.9% | 8.1% | 88.0% |
| ANGLO AMERICAN PLC | 9.9% | 4.1% | 44.7% |
| BHP GROUP PLC | 10.1% | 3.6% | 35.1% |
| MTN GROUP LTD | 3.0% | 3.3% | 183.6% |
| SASOL LTD | 9.9% | 8.1% | 88.0% |
Top 5 return detraction:
| Average Weight | Contribution to Return (%) | Total Return (%) | |
| NASPERS LTD-N SHS | 8.5% | -2.0% | -17.9% |
| SIBANYE STILLWATER LTD | 2.4% | -0.2% | -9.1% |
| PROSUS NV | 2.8% | -0.2% | -17.4% |
| DISCOVERY LTD | 1.0% | -0.1% | -6.5% |
| ANGLOGOLD ASHANTI LTD | 2.2% | -0.1% | -1.7% |
Source: CoreShares Asset Management, Bloomberg LLC, Morningstar. All returns are in ZAR for the year ended 31 December 2021. Past Performance is not indicative of future performance.