Janina Slawski, Head of Investment Consulting at Alexforbes
Key themes
- Based on the June 2022 Alexforbes Assets under Management (AuM) survey, Ninety One was the biggest single manager while Alexforbes Investments was the biggest multi-manager.
- Multi-managers have been steadily gaining ground on single managers in terms of AuM.
- More asset managers were rated level 1 contributors, with all of the top 10 managers and 19 out of the top 20 in the June 2022 AuM survey rated level 1.
- Even though the National Treasury’s decision to increase the offshore allowance for retirement funds to 45% was welcomed, most asset managers remain close to 30%.
- Sello Hatang, CEO of the Nelson Mandela Foundation, urges businesses to work together with the people they want to help, instead of developing solutions for them without their involvement.
- Business leaders were asked to share three hypothetical wishes, and the most popular one was for corruption-free state-owned enterprises to improve quality of life and the economy in South Africa.
The December 2022 Manager Watch™ Survey of Retirement Funds Investment Managers results have been published, analysing key statistics and findings from the survey by Alexforbes. This edition includes 28 surveys: 13 balanced, 14 specialist and a multi-manager survey.
Key findings of the survey results are as follows:
General
There has been an increase of 14% among asset managers and 27% of new strategies participating in the Alexforbes surveys in 2022 compared to 2021 as reflected in the table below.
| 2020 | 2021 | 2022 | |
| Asset managers | 77 | 79 | 90 |
| Participating strategies | 485 | 542 | 689 |
Number of participants (portfolios) across some surveys
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |
| SA Equity – non benchmark cognisant | 31 | 28 | 24 | 22 | 21 | 28 | 30 | 27 | 26 | 27 |
| SA Equity – benchmark cognisant | 22 | 22 | 25 | 41 | 28 | 36 | 41 | 43 | 51 | 54 |
| Total Equity | 53 | 50 | 49 | 61 | 49 | 64 | 71 | 70 | 77 | 81 |
| Absolute Returns | 41 | 44 | 42 | 31 | 34 | 31 | 31 | 44 | 48 | 48 |
| BEE | 24 | 25 | 26 | 31 | 47 | 51 | 63 | 78 | 101 | 109 |
| Global BIV | 21 | 22 | 23 | 23 | 22 | 27 | 32 | 34 | 36 | 40 |
| Property | 12 | 13 | 13 | 14 | 14 | 14 | 13 | 13 | 17 | 18 |
| Multi-Manager | 49 | 50 | 51 | 55 | 57 | 61 | 61 | 60 | 67 | 73 |
| Specialist Bond | 21 | 20 | 21 | 23 | 22 | 24 | 23 | 24 | 26 | 26 |
The largest increase in 2022 over 2021 was a 9% increase in portfolios in the Multi-Manager survey.
AuM survey highlights
According to the June 2022 AuM survey, which includes assets owned by South African clients only, Ninety One Asset Managers was the largest South African asset manager, consolidating its 2021 position with an increase in assets of 13%. STANLIB AM stayed in second spot, despite a decrease in assets of 5%, while SIM leapfrogged Coronation into third spot despite only a 3% increase in assets from June 2021.
Alexander Forbes Investments continues to be the largest multi-manager in South Africa filling seventh position amongst overall AuM. Multi-management is an investment approach that allows the multi-manager to select and combine many single asset managers, across different asset classes and styles of money management, into one portfolio solution.
The growth of assets managed by multi-managers, relative to those managed by single managers, has been steady. When looking at the total AuM in the 2016 survey, the single manager versus multi-manager split was 86%:14%. In 2022 the split was 80%:20%.
The total AuM of participants in the survey increased by 3% from June 2021, with the concentration still remaining among the top 10 asset managers. The AuM held by this group constituted 64.7% of the assets for the total universe of 77 managers participating in the survey.
AuM survey universe summarised according to BEE contributor levels
| Contributor levels | 2019 | 2020 | 2021 | 2022 | |
| Level 1 | 21 | 21 | 36 | 49 | |
| Level 2 | 26 | 28 | 22 | 14 | |
| Level 3 | 4 | 3 | 1 | 2 | |
| Level 4 | 3 | 5 | 4 | 3 | |
| Level 5 | 1 | 1 | 1 | * | |
| Level 6 | 2 | 1 | * | 1 | |
| Level 7 | * | * | * | * | |
| Level 8 | 2 | 1 | 1 | 1 | |
| Unrated | 6 | 9 | 7 | 7 |
* No managers at this level
An impressive 49 of the 77 participating asset managers were level 1 contributors, compared to the 36 in last year’s survey. All of the asset managers in the top 10 of the June 2022 AuM survey were rated level 1 contributors in 2022, which is unprecedented. Similarly, for the first time we have 19 level 1 contributors in the top 20 managers ranked by size, which is an increase of 46% over the 2021 number.
ESG considerations
CRISA and the PRI are two codes that provide guidelines for companies to incorporate environmental, social and governance (ESG) factors into their investment processes and business decisions. In 2021, out of the participating asset managers in the Alexforbes surveys, 43 were signatories to the PRI, while 56 adopted the principles and practice recommendations outlined in CRISA.
However, in 2022, there was a significant increase in the number of asset managers indicating their commitment to both codes. Specifically, 48 managers became signatories to the PRI, and 62 endorsed CRISA. This trend signifies that companies are increasingly recognising the importance of responsible investing practices and are taking steps to incorporate ESG considerations into their decision-making processes.
SA Property Manager Watch™
The South African property sector was the best-performing asset class in 2021, with the South African Property Index (SAPY) returning 36.9%. After the highs of 2021, the SA property sector was the worst-performing asset class in 2022, as companies maintained their working-from-home policies which negatively impacted the office space. The SAPY index returned 0.5% for the year. According to the survey the 2022 performances of the asset managers in the 75%-100% listed property category indicated a tough investment environment with the participants returning an average of -1.3% for the year.
SA Equity Manager Watch™ Benchmarks
Benchmarks of portfolios participating in the Equity survey as a percentage of the survey are:
| Benchmarks | % of universe in 2020 | % of universe in 2021 | % of universe in 2022 |
| FTSE/JSE All Share | 5.7% | 5.2% | 4.9% |
| FTSE/JSE Capped All Share | 2.9% | 5.2% | 4.9% |
| FTSE/JSE SWIX All Share | 24.3% | 20.8% | 19.8% |
| FTSE/JSE Capped SWIX ALSI | 47.1% | 52.0% | 55.6% |
| FTSE/JSE SWIX 40 | 4.3% | 3.9% | 2.5% |
| Other | 15.7% | 13.0% | 12.4% |
Fee survey
The managers were requested to standardise their fee structure using a sliding scale framework with distinct AuM bands. Previously, managers reported the fees of domestic and international assets separately for their Global Balanced funds. However, starting in 2021 and continuing in 2022, asset managers began reporting a total fee for their Global Balanced portfolios. This change made it difficult to compare fees for international assets with those of previous years. It is important to note that the standardised fees based on AuM categories may not reflect an individual manager’s fee scale.
Initially, there was some reluctance among asset managers to share fee information, and the response to the data submission request in 2021 was disappointing. However, there was a much better response in 2022.
Maximum, minimum and average base fees charged
| Maximum | Minimum | Average | |
| Global BIV – Pooled | 0.96% | 0.38% | 0.67% |
| Domestic BIV Pooled | 0.90% | 0.40% | 0.60% |
| Global Absolute Return Pooled | 0.96% | 0.35% | 0.71% |
| Domestic Absolute Return Pooled | 0.95% | 0.35% | 0.60% |
| Domestic Equity Pooled | 0.99% | 0.35% | 0.69% |
| Domestic Specialist Bond Pooled | 0.55% | 0.20% | 0.37% |
| Domestic Money Market Pooled | 0.33% | 0.13% | 0.24% |
SA and Global Balanced Manager Watch™ – Best Investment View
In the SA Best Investment View (BIV) category, all 15 managers had positive returns for the year, with 7 out of the 15 beating the BIV median of 6.2%. Truffle was the top performer for the year, benefiting from both stock selection and asset allocation.
The domestic equities and bond asset classes were among the best performers for the year ending December 2022. Truffle’s preference for domestic equities and fixed income during the year paid off, as many SA shares offered meaningful value and the 10-year bond provided a compelling yield. As the underlying manager within the Nedgroup Investments (Truffle) Managed Fund, the above commentary on Truffle’s performance also applies to the Nedgroup Investments fund.
In contrast, the Global Best Investment View category of the Manager Watch survey delivered a muted performance for the year, underperforming the domestic mandates by 4.3%. The majority of asset managers in this category kept their domestic asset allocation stable, with the exception of Prescient and Coronation, who decreased their allocation to domestic equities by 19.9% and 14%, respectively, compared to their positions in December 2021.
Although the National Treasury’s decision to increase the offshore allowance for retirement funds to 45% from 30% was welcomed by asset managers, most managers remain close to the 30% mark for investment in international assets. The average exposure to international assets of the peer group participants was 29.9%, with only 7 of the 40 managers lower than 30% by more than 5%. ClucasGray had the lowest exposure at 15.1%, followed by Northstar at 17.9%, with these two asset managers finishing in positions 7 and 14 out of 40, respectively, when comparing their performance for the year relative to their peers in the survey.
My three wishes for South Africa are …
We offered leaders an opportunity to share three wishes, hypothetically speaking, which they thought could contribute to the eradication of some of the difficulties which continue to engulf South Africans and affect quality of life and the economy collectively.
The top four wishes for the country’s growth and development were:
- Corruption-free state-owned entities: State-owned entities (SOEs) are essential for the country’s development, and their mismanagement due to corruption has resulted in significant losses for the country. A corruption-free environment in SOEs would ensure that they function efficiently, are financially sustainable and contribute to economic growth.
- The reduction of crime and lawlessness: A reduction in crime and lawlessness would lead to improved safety, security, and a conducive environment for economic growth and development.
- Quality education and meaningful employment for all: Improved access to education would ensure that all citizens have the necessary skills to participate in the economy, while meaningful employment would reduce poverty and inequality.
- A permanent solution for South Africa’s energy and electricity challenges: South Africa’s energy and electricity challenges have been a significant constraint on economic growth and development. A permanent solution to these challenges would ensure that the country’s energy supply is reliable, affordable and sustainable, which is essential for both households and businesses.
Overall, achieving these wishes would require significant effort and collaboration from all stakeholders, including the government, private sector, civil society, and citizens.
To download the December 2022 Manager Watch™ Survey of Retirement Funds Investment Managers – click the image below.
ENDS
