Is quality information sufficient to drive the wheels of Transformation?
Of the R6 Trillion available for privately owned asset managers to manage, less than 7% is managed by organically grown black asset management businesses. This statistic demonstrates the poor level of penetration these organically grown businesses have had over the past 27 years. Are some of the reasons put forward for this, of lack of good options for asset allocators to choose from, lingering perceptions of poorer performance from black asset managers and the lack of track record of black asset managers, sufficient to justify this slow pace.
The theory is that with a model of quality information shared with asset allocators on black asset managers, the asset allocators will allocate assets to the good managers, and these managers will be able to grow their businesses and make their way towards being regarded as mainstream managers. Much like what we did in the late 1990’s and early 2000’s when emerging asset managers at the time, like Allan Gray (R19 Billion), Prudential IM (R7billion), Quaystone Asset Management (R10 Billion)and Foord Asset Management (R1 Billion) were analysed using the 4 P’s – People, Process, Philosophy and Performance; asset allocators decided to give these managers the opportunity to manage their assets. As it turned out some of these managers did very well and other not so.
At the time asset owners and allocators used analysis criteria tuned to analyse emerging businesses. As these emerging businesses became large businesses, our analysis techniques evolved with them, as they should have. However, generally over time, not enough cognisance was taken of subsequent emergent businesses, which used different business models which require modified analysis based on these differentiated features.
Today black asset managers find themselves in the difficult situation where they are regarded as emerging but too many are not being given the opportunity to manage asset. Have asset allocators satisfied themselves with enough research and knowledge of the approximately 40 organically grown black asset managers to discern the kind of view they may have on the incumbent large asset managers.
Perhaps the answer lies in a true willingness from all asset owners and allocators to want to see transformation and the immense benefits it will bring.
We are always excited to hear from you.
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Investment Strategy and Distribution
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