Investment is an art, some say. It is a science, others contend. What really matters, however, is the returns.
Money managers tell us they are worth the fees they charge and claim they know what they are doing. So how did money managers do in the past 12 months? Well some impressed quite a bit, while others just held on to their hats.
This year, Iran’s equity markets went on a ride on the sanctions train. As Iran negotiated with representatives of the international community to lift them, markets moved with the developments.
Adding to the excitement was the continuous slump in commodity prices, a slowdown in the global economy and much internal turmoil.
Stocks rallied twice early in the current Iranian year (started March 21, 2015) on Tehran Stock Exchange.
Once in late March, when Iran and the P5+1—Britain, France, the United States, Russia and China, plus Germany—reached the framework of an agreement on Tehran’s nuclear program. The second time was in July, when the two sides ended their decade-long dispute and reached an agreement.
On both occasions, TSE failed to hold on to its gains as skepticism around the deal and falling oil revenues of the government extinguished hopes of an economic turnaround.
But at last, the deal went into effect, much to the dismay of opponents. The lifting of sanctions in mid-January heralded an era of normal relations with the world and a move towards an open economy.
The rally that ensued astounded many market analysts, especially those focusing on the still weak market fundamentals.
TSE’s main index, TEDPIX, started the year just above 60,000 points but is finishing it above 80,000 points. That is nearly a 30% gain. How did mutual funds do in comparison?
The Financial Tribune has reviewed the performance of all Iranian equity-only mutual funds investing only in stocks, which were active throughout the year.
The funds’ average return was just below the market at 28.2% for the year and 35% for the fourth quarter when TSE rallied.
Although one might argue that you would have been better off tracking the index, you could have earned enormous returns if you had placed your money within the right fund.
The Triumphant
The top five equity funds netted their investors a staggering 71.9% return. Much of that money was made in the runup and after the sanctions were lifted in July. On average, the top five made 76.2% for their investors during the fourth quarter.
Naghshe Jahan is this year’s star. Its manager, Omid Arjmandnia, managed to extract a lofty 83.9% for his investors in this market downturn. However, most of the fund’s returns came from capitalizing on the recent rally in equities. The firm gained a spectacular 82.6% during the past three months.
After gaining impossible returns, the fund has seen a surge in investors. Its units have risen to 7,700 from 5,500 a month ago, registering a 40% increase. The fund, managed by Ordibehesht Iranian Brokerage, has 34.9 billion rials (about $1 million) of assets.
Pars Gostar was the next best place to have parked your money for the year. But its returns came nowhere close to those of Naghsghe Jahan. The 54.5-billion-rial ($1.6 million) fund earned its investors a stunning 66.9% return for the year. Again most of the gains came from capitalizing on the rally. The fund’s assets rose 54.7% in the past three months.
Zarin Parsian was the third best performer of the year. The 65.8-billion-rial ($ 1.9 million) fund rose 54.2% in the 12-month period. The fund’s fourth quarter returns were 40.3%.
Big Money Moves Slow
But these are all small-cap funds compared to the market’s largest equity fund Boursiran. With assets in excess of 1.12 trillion rials ($33 million), Boursiran dwarfs all other funds. It is larger than the next four largest equity funds combined. The fund brought its investors 21% for the year.
But the fund was at a loss for much of the year only coming into profit when the TSE rally started. Its fourth quarter return of 30.9% shows the effect of the rally.
The second largest equity fund in Iran, Agah, was worse off than Boursiran. The 293.7-billion-rial ($8.6 million) fund rose 16.5% for the year and made 23.5% in the fourth quarter.
Gains in the top five large equity funds averaged 22.8% for the year, according to data compiled by the Financial Tribune. Their fourth quarter earnings averaged 26.6%.
Trash to Avoid
The bottom five performers returned on average 1.84% for the year and 17.9% in the fourth quarter.
Sepah Bank’s mutual fund performed the worst down 7.8% in the past year and 2.6% in the past three month. The fund is now worth 4.3 billion rials ($126,500).
The next two worst performers left the fortunes of their investors at the mercy of inflation, yielding close to zero for the year.
Nikan Pars’s assets remained unchanged at 10.2 billion rials ($300,000), thanks to a generous 29.8% rally in the funds value in the past three months.
Hamian Sepehr rose 0.6% during the year. The 19.3-billion-rial ($567,600) fund has had a stable ride. The post-sanctions rally in stocks only earned it 11.4%.
