The good news from the latest BEE.conomics survey is that the assets of black-owned asset managers increased by more than 70% to R1.15-trillion over the past year.
The bad news is that the spoils are not being well spread. Just five firms — newcomer Sanlam Investments, Taquanta, Prescient, Aluwani and Vunani — make up 73% of the assets. And Vunani was the fastest growing manager, increasing assets by 30% to R54.7bn.
The rest is shared between 51 asset managers operating in both public and private markets. No less than 30% of these firms are not yet profitable. The biggest losers were Afena Capital in which AUM fell by 58% to R1.7bn and First Avenue which declined 56% to R2.5bn.
The survey, produced by 27four, is considered to be the most authoritative annual review of transformation in SA asset management, and CEO Fatima Vawda says black asset managers now run 20% of available assets under management in SA.
This excludes the internally managed money run by large state institutions such as the Public Investment Corp, which is not farmed out to external managers.
As well as Sanlam Investments, two historically white fund managers, Catalyst Fund Managers and Blue Alpha have joined the BEE sector. Taquanta, which started life as part of the Nedbank Treasury business, acquired Ngwedi Investment Managers. This provides this fixed income manager with a credible active equity unit, with the well-regarded Raphael Nkomo as chief investment officer. Other than Ngwedi there have been just two exits of fund managers in the public (listed) space: Idwala and the catchily named Fortitudine Vincimus Capital Advisors. Mazi Asset Management returns to the survey after failing to file its paperwork in time last year.
The BEE managers used to operate predominantly in active domestic equities, which accounted for 62% of assets in 2011. This has now fallen to 29%. At the same time, fixed income mandates have increased from 26% to 45% of the total, while the number of BEE managers offering global equity products has increased from 11 to 15.
Vawda says the market for BEE managers remains predominantly institutional with retirement funds accounting for 79% of assets. But there are now 139 unit trusts offered by BEE managers, which have a 13.5% market share (though this includes the Sanlam unit trusts which have operated in the market since the late 1960s).
There isn’t universal enthusiasm for dedicated BEE surveys. Yoza Jekwa, CEO of R37bn Mergence Investment Managers says she would much rather be considered a serious contender for mainstream mandates than to be competing for the crumbs offered to BEE firms. The leading BEE property firm Sesfikile no longer bothers to fill in the 27four questionnaire as it prefers to be seen as a mainstream SA manager with a global investment capability.
Alexander Forbes senior consultant Janina Slawski says pension fund trustees are taking a risk with members’ savings every time they invest money with asset managers with short track records.
"In fact SA funds are much more open to giving emerging managers a chance through incubation programmes than their counterparts elsewhere." Forbes supports these managers through its New Horizons fund.
But she argues that it is not realistic to exclude emerging managers which are not majority black owned that have strong track records, such as Truffle, 36One and Fairtree.
Not that the major firms can be described as "white" managers anymore. Coronation, for example, has a black CEO and a black finance director. The head of Ninety One SA, Thabo Khojane and two of his three deputies are black.
Kim Zietsman, head of business development at R30bn historically white firm Laurium Capital, says the fund manager has not been turned down for business as it is not a majority black-owned firm but clients do expect to see increased diversity. "We have significantly increased our BEE procurement, placing more business through black-owned stockbrokers and eight out of our 12 most recent hires have been black."
Laurium is also setting up a BEE Trust which will have 10% equity ownership.
While clearly the trend in empowerment is the right way, asset management is hardly what you would call a large job creator.
The whole BEE sector has just 1,157 jobs, with 35% of them alone in Sanlam Investments. As Vawda points out, Vunani, for example, has not needed to add a single job to cope with the increase in its assets under management, given the scalable nature of the fund management business.
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