Please find attached the latest copy of the Motswedi survey. As always we look forward to hearing your comments and suggestions.
Trustees Dilemma in face of Cofi Bill and FSCA Transformation legislation
A real dilemma Retirement Fund trustees are currently facing is the expectation upon them to transform the Retirement Funds they represent, deliver performance and at the same time manage their deep sense of risk aversion. As we know, there is lots of comfort in allocating to well know asset managers, the old cliché comes to mind, no-one ever got fired for using IBM.
For most Trustees, when it comes to black asset managers, what keeps them up at night is the process of trying to understand the perceived risks of investing with unknown asset management businesses. They are just not household names and if they underperform it will look bad on me, something which Trustees and asset allocators are very afraid of.
How many black asset managers are we talking?
In South Africa, there are approximately 25 majority black owned and managed asset managers which have AUM of R10 billion or less – 19 of them have AUM of less than R5 billion. An interesting observation to make is that the R5 billion AUM mark is a critical phycological level, in the minds of Retirement Fund Trustees looking at black asset managers, as these Trustees tend to find a basic level of comfort.
From the perspective of the black asset manager, the reality that many of them face is that they will not go onto become household names and will languish at the levels of R5 billion AUM and below for many years.
For some this may be the aim, for many others not. For those which do find growth, we cannot understate the importance of progressive Boards of Trustees who are proactively looking to support black asset managers and are using a skilled researcher with specialisation in the universe of Black Asset Managers – like Motswedi.
A quote which I recently came across in a CFA Institute article resonated with me regarding ESG investing in a South African context: “We believe social, the “S,” should be the highest priority. Why? Because sustainability is all about humanity.”.