My 8 year old daughter asked me to read a story with her the other day about “The Wind and the Sun”. In the story an argument broke out between the wind and the sun about which was the strongest. At that time, a person was walking down the road. The sun and the wind agreed that to settle the disagreement, the one which could make the person remove their coat would be judged the strongest. The wind agreed to go first and began to blow an icy blast of cold air as hard as it could at the person. But the harder the wind blew the tighter the person held onto their coat; after exhausting all its energy, the wind finally gave up. It was then the sun’s turn, and it began to shine. Soon the clouds began to disappear and it started to get hotter, and soon enough the person loosened their coat and finally took it off. Turns out, as the story goes, the sun was stronger.
In the context of this story, do you see the upcoming Cofi bill as a legislation based in “Wind” or in “Sun”..? What are the intended and unintended consequences of this legislation based on if you think the role of the Regulator is either one?
In our view, looking at the representation of black owned asset managers, in the South African financial services industry, after almost 30 years of democracy, the Regulator has slowly but surely taken on the role of the “Sun”. The persuasion of the “Sun” over time has gotten to a point where it is becoming very “hot” and asset owners and asset allocators are going to have to start re-thinking holding so tightly onto their “coats”.
Medium and small sized asset managers
One of the take aways from the proposed Regulations is regarding the focus on medium and small sized businesses in the financial services industry, and particularly Motswedi’s focus, the asset management industry. In our observation, the issue is not whether asset owners are allocating assets to existing large asset managers which are bringing in black people at ownership level – a good thing, which has been monitored for some time. The issue is that the Regulator would like to see more medium and smaller sized asset managers businesses, like Motswedi, being given an opportunity to manage meaningful assets on behalf of asset owners.
It is about co-ordinating regulation to drive asset owner Transformation planning and to see the creation of space for new participants in the industry which over time will see the growth in the size of the industry through diversity and innovation.
As always looking forward to hearing from you.
Download the Emerging Asset Manager Survey Listed Investments – March 2022
Mark Davids
Investment Strategy and Distribution
Cell: 083 222 9913
Tel: (010)110 8768
Fax: 011 656 1165
Email: davidsm@motswedi.co.za
Website: www.motswedi.co.za
