After seven years most would agree that Ashburton Investments has not delivered the quality results we have come to expect from the FirstRand Group. We don’t know for sure, as its numbers are not separately disclosed, but it probably remains in the red.
It was a curious decision for Ashburton to adopt the brand of a small shop it had bought in Jersey instead of reviving the RMB Asset Management brand. The old Ashburton depended on a few ageing private clients and it did not have an institutionally recognised investment process.
The outgoing CEO of the larger group, Boshoff Grobler, was a confirmed merchant banker with no asset management experience. To be fair, he did one very good deal: the purchase of Atlantic Asset Management, a specialist fixed income business. In the process he brought some heavyweights on board: Arno Lawrenz, who is now group strategist; and Heather Jackson, who knows more about obscure bonds than anyone outside Futuregrowth. Then there’s Murray Anderson, a consummate marketer — even super-saleswoman Magda Wierzycka once hired him to help with her marketing efforts.
But Ashburton doesn’t feature as an equity or balanced manager. With hindsight it must realise that it made a mistake with the appointment of the bright but inexperienced Nkareng Mpobane as the chief investment officer for public (listed) markets, instead of a high-profile appointment. Wayne McCurrie, the former chief strategist at RMB, was already there and would have been a more logical choice. Ashburton has now realised it must go large or go home and has appointed Patrice Rassou from Sanlam chief investment officer.
No doubt a few star managers will follow him.
So far there has been too much focus on unlisted assets. FirstRand, after all, originates a huge volume of unlisted bonds which can be sold on to the public. It has other obscure pockets of expertise such as liability-driven investment. This allows defined benefit funds and insurers to meet their liabilities with more certainty, predominantly through fixed income portfolios.
But even here Costa Economou and Shaun Levitan’s Colourfield is the market leader by some margin.
New Ashburton CEO Sizwe Nxedlana, who retains his role as head of FNB Wealth & Investments, has a mandate to turn it into a credible supplier of retail products to the FNB customer base. Already, he has democratised FNB investment product sales. Instead of being sold exclusively through 350 stuffy wealth managers, they are now sold through branches and robo tools. Nxedlana promises that FNB products such as the Horizon series of funds of funds will only use Ashburton building blocks if they are best of breed. There will be a major cost saving once FirstRand can implement a vertically integrated model.
FirstRand COO Mary Vilakazi says that under Rassou she believes the disparate investment centres in the group can be strengthened and some duplication removed.
For example, there is effectively a balanced management capability in FirstRand Treasury, which manages the group pension fund, and there are credit research skills in both Ashburton and Rand Merchant Bank.
The low-hanging fruit is undoubtedly the retail client base, virtually ignored when RMB Asset Management was the group investment house. Going for the big institutional money would be as pointless as chasing unicorns.
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