Top 20 at 25

A BOLD IDEA THAT HAS STOOD THE TEST OF TIME

When Coronation launched the Top 20 Fund in 2000, the idea was deliberately bold — a portfolio of no more than 20 of our highest-conviction South African shares, built to outperform the market over time.

It was never meant to be a smooth ride. By design, the fund is aggressive enough to amplify our best ideas, yet disciplined enough to sell when valuations run ahead, and patient enough to let compounding do its work.

A quarter of a century later, the results speak for themselves. Since inception, Top 20 has delivered 16.4% per annum, ranking no. 1 in its ASISA category (SA Equity – General) as at the end of September 2025.

DOUBLE THE MARKET RETURN

This return translates into an annualised outperformance of the market index by 2.6% per year. While that may sound modest, compounded over 25 years it is transformative (see Figure 1).

An investment of R100 000 at launch would today be worth well over R4 million – almost double what the same investment in the market index would have achieved. It proves that a strategy grounded in discipline and tested through volatility can deliver exceptional long-term results.

This is the power of compounding when combined with focus and discipline.

AN AGGRESSIVE PORTFOLIO THAT DEMANDS PATIENCE

With only 20 holdings, Top 20 is aggressive by design. Long-term supporters know not to expect steady returns. The fund’s concentration creates the potential for meaningful outperformance but also leads to short-term volatility, as shown by the rolling one-year alpha since inception (see Figure 2).

Short-term dips are the price of high conviction investing. Over time, that conviction has rewarded investors who stayed invested through market cycles.

Because of its concentrated nature, we recommend that investors hold Top 20 alongside other highly rated equity funds to build a balanced equity portfolio.

INGREDIENTS FOR SUCCESS

1) Long-term focus backed by deep research

The fund’s track record reflects the strength of our proprietary research across local and global markets, supported by an experienced investment team. Every idea is analysed, debated and valued on long-term fundamentals.

This process benefits from the experience of three former CIOs, alongside current CIO Karl Leinberger, who has led the team for nearly two decades. Their collective perspective across economic and market cycles remains a key advantage.

2) High conviction and discipline

The 20-stock limit enforces discipline. To add a new idea, something else must be reduced or sold — every holding must earn its place.

Buy and sell decisions are anchored in valuation: we trim or exit stocks approaching fair value and redeploy capital into higher-return opportunities. This discipline has defined Top 20 for 25 years, led for most of its history by senior portfolio manager Neville Chester and, in more recently years, supported by portfolio manager Nicolas Stein (co-manager since 2017) and Head of SA Equity Research Nicholas Hops (co-manager since 2024).

DIVERSIFICATION WITHIN CONCENTRATION

Although the fund holds only 20 shares, it is built to navigate a range of market conditions. Its current positioning reflects our best bottom-up investment ideas across global and domestic industrials, financials and resources.

• Global Industrials: Prosus/Naspers remain core holdings, supported by ongoing buybacks. We have added to Aspen after its share price weakness and continue to hold Anheuser-Busch as margins improve.

This positioning reflects the same discipline that has guided the fund for 25 years: sell when the margin of safety narrows and buy into weakness when quality is mispriced.

ENDURING CLIENT SUPPORT

Top 20’s success would not have been possible without investors who remained invested through volatile markets. And we thank every client who has supported the fund over this past quarter century.

As portfolio manager Neville Chester noted before: “It sounds relatively easy and almost common sense to invest this way, but it is far more difficult to do so in practice than it is to describe on paper.”

Investing isn’t about predicting smooth paths; it’s about temperament. Those who stayed the course (as per the real client example below) have unlocked the full benefit of Top 20’s discipline and compounding.

LOOKING AHEAD

Our approach remains unchanged: find mispriced assets, manage risk carefully, and stay true to our valuation-driven philosophy.

After 25 years, Coronation Top 20 has shown that a disciplined, high-conviction portfolio can generate exceptional wealth for investors who stay invested through its ups and downs.

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