Asset Manager Survey Listed Investments – November 2022
Mark Davids, Head Investment Strategy and Distribution – MOTSWEDI
From 8% to 16%
Organically grown black fund managers manage less than 8% of the available assets in the long-term savings and investment industry (R7 Trillion). Purposeful and innovative ideas are required to achieve 16% representation of Organically grown black fund managers within a shorter period of time relative to the current trajectory.
Solving for organically grown black fund manager growth
Organically grown black fund managers are businesses which were started by black individuals who generally worked at the large traditional fund manager houses and investment banks and decided to leave the comforts of the steady paycheque for the unknown entrepreneurial journey. While there are around 40 majority black-owned fund managers in South Africa, the majority of them remain sub-scale.
About 25 have AUM of less than R10bn.
Still, having gathered some assets these managers have already overcome many barriers to entry in the industry. One of the main challenge these managers often encounter is the perception of lack the necessary capacity, from asset allocators, which prevents them from gathering mainstream assets.
In response to this, Motswedi has identified the opportunity to engage with corporates to steer enterprise and supplier development funding towards emerging managers – see the Motswedi interest-free loan funding programme for black fund managers.
AUM growth
The primary objective of all fund management businesses is to increase the amount of client funds they manage, ie. accumulation of assets under management (AUM). AUM creates, especially for emerging fund managers, levels of sustainability which allows them to expand and express their investment capability and proprietary investment theories into investment decision which aim to deliver positive investment outcomes for clients.
Every new client a fund manager wins, it means another fund manager has had to have lost that client.
Sadly, in the black fund manager space, these assets tend to move from one black fund manager to another, mainly because the pool of investors appointing black managers is not big. As a result an undercurrent of unhealthy-competition has developed among some managers. Competition is a good thing, but we are talking about fighting over the same 8% of the proverbial pie.
Our collective aim should be to convince the remining 92% of clients in the long-term savings and investment industry, to use the services of black fund managers and demonstrate our fresh innovative ideas and approaches to investing.
The question we ask is: “How do black fund managers box smarter and take on the established players?”.
Conclusion
There is little knowledge around the organically grown black fund manager space. When it comes to finances, people tend to be particularly risk averse. So, it’s been very difficult for many of these managers to get going. But Motswedi have proven how new ideas can make a significant impact in changing perceptions for black fund managers. In our view, all efforts should thus be to get to 16% representation of the asset management industry within a shorter period of time relative to the current trajectory.
Download the Asset Manager Survey Listed Investments – November 2022: Click below…
ENDS
