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Every investor, depending on his experience over a certain period, could group the performance of the JSE's Top 40 shares differently. The following classification in six divisions or sub-sectors is a good start to test your own success.
1. Precious metals
None of SA's three gold shares has yet been able to provide investors with a positive return this year. At least the two white precious metal shares - Anglo Platinum (27%) and Impala Platinum (20%) - haven't disappointed so far this year against the Satrix 40's 20%. The choice was clearly the white rather than the yellow metal.
2. Mining houses and resources
As so often in the past, the major winners for the year to date have, of course, been resources. But the 60% increase in the price of BHP Billiton since the beginning of the year has dominated so much that every investor could rightly wonder why he didn't focus on only that share.
Luckily, Finweek pointed out to its readers early this year that the group had such a fine portfolio of assets spread so well worldwide that BHP Billiton can also be trusted as a portfolio manager. The two newcomers in the sector - Exxaro and ARM - also did their bit relative to the Satrix 40.
3. Financial sector
It's always been an investor's favourite, because it's so safe, so easy and is made up of household names. So far this year these investors have missed the boat. In the face of all expectations and predictions, the price of Sanlam has already increased by 23% this year, at the same time dragging down a hedge fund, which couldn't believe it, and sold the share short on a large scale.
Compared with Sanlam's outperforming the Satrix 40, the rest of the financial sector looks rather uninspired, especially Old Mutual, which has seen its value rising by only 2,3% so far this year. Add to that the sharp increase in the value of the British pound against the rand over the past year and the Old Mutual tale is even more tragic.
Absa, with strong world player Barclays plc as its chief shareholder, could produce an increase of only 4,7% in its share price and fared the worst of SA's Big Four banks. Not that the increases in the other banks' share prices are particularly wonderful compared with the Satrix 40.
4. Always winners
A few of the Top 40 shares are simply proud members of the list of winners every year. MTN is one such share. Since old and young alike learnt to start chatting on cellphones about a decade ago, the price of MTN's shares has increased more than a teenager's cellphone account - impossible though that might sound. For the year to date its price is 23% higher and it's currently still one of the most popular for next year.
The same can be said of Mittal. It kicked off the century still as boring old Iscor. Since then its share price has simply doubled every year, if all the subdivisions in Kumba and now another time in Exxaro are taken into consideration. It's now an extremely popular share at R117, especially with Highveld perhaps disappearing soon.
Over the past five years much has been written about the wonderful prosperity and wealth that can be achieved with residential property. However, an investment in PPC Cement would have given a better return than the best house every year. The 23% increase in its share price so far this year is already better than can be expected from houses for the full year.
Woolworths is the last retailer in the Top 40 - and clearly not without reason, measured by the 23% increase in its share price for the year to date.
5. New sweet and sour for the year
The excellent recovery in the prosperity of Murray & Roberts and the 89% increase in its share price this year is undoubtedly the biggest and most pleasant surprise in the Top 40. The share wasn't lifted up by its sector. It was an individual winner probably not seen in time by many investors.
On the other side of the coin, there's Imperial Holdings, a fine performer over the past 20 years that suddenly got bogged down badly this year. Its share price has fallen by 12% so far this year, placing it on the second-lowest rung of the Top 40 ladder.
The honour of being the poorest performer so far this year goes to another stalwart, Liberty International. The price of the share, one of the best over the past five years and a property group that's even highly respected in the mighty London (where it's based) has already fallen by 16,75% in rand, and by 22% in London, this year. That's just another little warning of what can happen to the price of property investment companies if interest rates increase and rental income levels off.
6. The old top shares
They've also not done at all well so far this year. Sasol is struggling and is faring poorly relative to the price of crude oil. And let's not even mention the returns being achieved by other energy companies worldwide.
Remgro's share price has only increased by 4% this year and this old heavyweight has a lot of catching up to do if, as often in the past, it's to beat the return on the Satrix 40.
Richemont's share price started recovering nicely recently, but with an improvement of only 8% for the year to date it still looks pretty lacklustre next to the Satrix 40.
To pick the right shares - even the right sectors - in the Top 40 is often more than just an art or a skill. Sometimes a lot of luck is also needed. The Satrix 40 is a disinterested asset manager. Those that perform poorly automatically drop out of its portfolio, while new winners are automatically included.
Some asset managers do in fact succeed in regularly beating the return of the Satrix 40. But with its 20% increase for the year to date, the Satrix 40 isn't a bad choice.
