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The thought of outperforming the market is every investor’s dream, but with so many managers attempting to add value through active security selection, is it possible to consistently add value? And is the source of excess returns due to stock picking skill, or may it be attributable to another external factor? We consider these ideas in this article.

Transitioning from the upbeat close of 2023, February 2024 unfolded with mixed market outcomes. Locally, the ALSI extended its downward trajectory amidst a lukewarm response to the South African budget speech, while global markets showcased resilience, particularly as emerging economies were buoyed by a recovery in China. Amidst looming uncertainties surrounding elections and policy, a gradual moderation in inflation, as well as attractive valuations suggest that there may be good prospects awaiting past the heightened volatility.

CHAROLYN PEDLAR - The annual Morningstar Awards recognise funds and fund houses that added the most value for investors within the context of their relevant peer group in 2023 and over longer time periods. Morningstar selects the finalists using a quantitative methodology with a qualitative overlay that considers the one-, three-, and five-year performance history of all eligible funds, and adjusts returns for risk using ‘Morningstar Risk’, a measure that imposes a higher penalty for downside variation in a fund’s return than it does for upside volatility.