Coronation Fund Managers and Ninety One are the two choices for punters looking to invest in the independent fund management sector. But they have very different profiles. Ninety One now sources almost two-thirds of its assets from global clients. Its CEO, Hendrik du Toit, and CFO, Kim McFarland, both live in the UK.
In contrast, Coronation still has 90% of its staff in Cape Town, and less than 10% of its assets under management are run on behalf of global clients.
According to CEO Anton Pillay, Coronation is a mature business in South Africa, as it has a market share of about 13% of the retail (unit trust) market and about 12% of the institutional (predominantly pension fund) market. Locally, its asset base cannot grow much until economic growth — employment growth in particular — resumes.
According to the interim results for the six months to March 2025, there was a net outflow of funds equivalent to 2.5% of opening assets. More than half the net outflows came from South African unit trusts, but there were also outflows from local pension funds as well as global mandates.
The outflows are at least slowing down; in the year to September 2024 they were equivalent to a substantial 8.1% of opening assets.
But this does not make Coronation an ex-growth company. Pillay says the shop still has a negligible share of the global fund management industry. It distributes global equity and managed funds internationally, and is best known for its emerging market funds.
It has a following among UK pension fund gatekeepers, and was named emerging markets manager of the year at the UK-based Pensions Age Awards.
But as of March 31 this year, Coronation ran just R47bn of assets for global institutional funds, compared with R331bn for Southern African clients. However, it runs R186bn of assets in its international strategies, running R139bn for local clients. Total assets under management increased by 1% to R676bn.
Pillay says all three of its main international products have been ahead of their benchmarks since inception. The MSCI global emerging markets index has given a 60% cumulative return (in dollars) since June 2008, when the Coronation Global Emerging Markets Fund was launched, but the fund has given a 120% return. Unfortunately, demand for emerging market equity funds has been limited as they have sharply underperformed developed markets over that time.
The much more niche Coronation Africa Frontiers Strategy portfolio has provided a 180% cumulative return since it launched in September 2008, while the FTSE-JSE Africa ex-South Africa index is down 20% in dollars.
The Coronation Global Managed Fund is not on many buying lists yet as it has thousands of competitors with much stronger brands globally, but it has had a strong year. Since inception in October 2009, it has yielded a 210% cumulative return compared with a 160% return from the benchmark — 60% global equity, 40% global bonds.
Pillay says Coronation plans to open a distribution office in North America. It already services the broader European institutional market from its satellite offices in London and Dublin. The firm has no immediate plans to set up offices in Asia or the Middle East, he says.
Over five years, about 95% of Coronation’s unit trusts and 90% of institutional funds have outperformed their peer averages
Coronation remains a domestic-focused company, with 90% of its staff still sitting in the head office in Claremont, Cape Town. By contrast, its main listed South African competitor, Ninety One, has offices on every continent except Antarctica (though it isn’t ruling out expanding there either).
With modern technology, global portfolios don’t have to be managed in London or New York any more, Pillay argues. Nonetheless, a few senior investment professionals sit in London, which adds some credibility for international clients.
Locally, Coronation has a long track record which has protected its market share not only from active managers but also from index trackers. Since it launched its Houseview equity product in September 1993, R1m invested in the JSE index would have grown to R54.2m, while early clients of the Houseview product would have seen their R1m grow to R102m.
Over the shorter term, the return has also been satisfactory. Over five years, about 95% of Coronation’s unit trusts and 90% of institutional funds have outperformed their peer averages.
A catalyst for growth could come from the change in Coronation’s BEE status. It is 52% black-owned. And it has achieved this without bringing in one of the usual suspects such as Patrice Motsepe, with the shareholding held through staff directly or a BEE staff trust.
Coronation now appears as a black-owned fund manager in the Alexforbes Retail Manager Watch Equity Survey and the 27four ESG Annual Asset Manager Survey. However, a change of status did not help Sanlam Investment Management much. In spite of effective control moving from Sanlam to Motsepe’s African Rainbow Capital, little money moved in its direction.
This is because, at the end of the day, investment performance is the only commodity that matters when it comes to picking fund managers.
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