Think Index: think people, think society, think planet
The 2022 Think Index conference, hosted by CoreShares and sponsored by 10X Investments, the JSE and Asset TV, covered portfolios, politics, power, partnerships and was even a little poetic at times.
After a welcome address by Thato Matsafu, the JSE’s Head of Primary Markets, and high-level, data-packed scene-setters from 10X Investments’ CEO Tobie van Heerden, CIO Anton Eser and Head of investments Christopher Eddy, the event was largely dominated by the view of the industry from the ground, from intermediaries and DFMs, which made for a very interesting day’s debate.
The sixth annual Think Index conference, which was hosted at the JSE on Wednesday September 14, was far from ‘death by PowerPoint’, with a focus on clients and their preferences often trumping the graphs and stats. A scattering of analogies and lots of wordplay added to the spirit of a very people-focused event.
In the first panel discussion of the day, DFM Perspectives: Building portfolios for the future, Brendan de Jongh of Portfolio Metrix gave the audience something to chew on when he compared portfolio construction with creating a diet for a client. Building portfolios could be as varied as creating diets for a Comrades Marathon runner and a regular couch potato, he said.
He was developing a theme introduced by his fellow panellists, Florbela Yates of Equilibrium and Tavonga Chivizhe of Boutique Investment Partners, who underlined the importance of taking account of client preferences, not least because it helped them to stay the course.
The panel, which was moderated by Citywire SA Editor Patrick Cairns, focused very much on creating bespoke solutions, something that Chris Rule, Head of Product and Client Solutions at CoreShares, talked to in his presentation soon afterward. Rule urged the audience to be more like Apple in focusing their efforts on the things they do well and leaving the rest to the best.
He unpacked how Apple, manufacturer of the most popular phones of all time, outsources manufacturing of the iPhone’s building blocks to various industry leaders. Then he gave a few examples where CoreShares has built bespoke building blocks for clients, who can stay focused on what they do well ie building relationships with their clients and understanding their needs.
Clients and their needs was also one of two main topics in focus of the next panel discussion, Financial Advice beyond 2022. Maya Fisher-French, the financial advisor-turned writer and TV presenter, introduced the other key topic, lack of trust in financial advisors. Reminding the audience that she was a financial advisor before immersing herself in the media, she offered her “sympathies” to advisors.
She knows their tribulations well, but Fisher-French was also frank about the public’s general lack of trust in advisors. She highlighted the remuneration system as a significant contributing factor. Noting that she did not know how to solve the problem, she spoke about a classic conflict between an advisor’s targets and a client’s needs.
Her fellow panellist, Craig Gradidge, of Gradidge Mahura Investments, mentioned his own mother’s comment when he told her he was going to start a financial advisory firm, that “nobody likes financial advisors”.
The panel moved on to cover how advisors can and do add a lot of value, as well as how they might improve and expand their services. The discussion included “coaching” people on their day-to-day finances, an area where Fisher-French says help is very much needed.
As much as the third panellist, Debra Slabber of Morningstar, is known for highly technical analysis and measurement of the value advisors add, or Gamma, the point she made that really resonated was that financial education and awareness should be normalised and brought into daily life, conversations around the dinner table and so on. Fisher-French concurred, saying that advisors could really add value by starting and joining these conversations.
This panel, moderated by CoreShares MD Gareth Stobie, really delivered the message South Africans need to start having honest, open conversations about money and wealth.
The keynote address by Ndabe Mkhize, chair of the investment working committee of the Asset Owners Forum South Africa, brought many of the themes of the day together. Talking about the active versus passive investment debate, Mkhize, who is the former CIO of the Eskom Pension & Provident Fund, reminded the audience that passive and active are different sides of the same coin, adding that South Africans’ insistence on separating into groups that totally support or 100% reject things is often not helpful, whether that be in investing or diversity.
He drove home the connection between the investment industry and society and the environment, neatly summarising an abiding theme of the day when he said that the two important Rs in investing (risk and return) must be expanded to include responsibility.
It was back to analogies in the final panel of the day, The ETF (R)evolution, when Eric Balchunas, senior ETF Analyst at Bloomberg Intelligence, really ramped up the wordplay. The moderator, Michelle Noth, Client Coverage Executive at CoreShares, set the scene for Balchunas, who dialled in from Chicago, by introducing the discussion with the line that ETFs are “the shipping container of the investing world”. Before the creation of the shipping container, moving goods (in sacks) was inefficient and burdensome, she said. Shipping was, of course, transformed by the creation of the container.
This comparison was particularly relevant in light of the JSE announcement earlier this month (September) that Actively Managed ETFs would be allowed to list on the JSE from October 2022. This is a notable milestone for the ETF industry in South Africa. ETFs are an extremely efficient wrapper that can make a wide range of investments easily accessible to all types of investors. They can, like a shipping container, form an efficient vehicle for delivering almost anything you can imagine, which is why the rise of ETFs is often described as “the democratisation of investing”.
Balchunas talked about the explosion of ETFs in the US, where there are even single-security ETFs, something he described as akin to “jumbo shrimp” and even single-person ETFs, such as the Meet Kevin ETF.
Nerina Visser, of etfSA, brought things back to the JSE by assuring the audience that ETFs would not explode in South Africa the way they had in the US because the broad-based adoption in the US had been fuelled by a tax incentive specific to that market.
There is, nonetheless, lots of growth expected in these simple, low-cost investment building blocks in South Africa as the investment industry works hard to create connections between people and society and wealth creation at such events as Think Index.
ENDS
The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. 10X Investments is an authorised FSP (number 28250).
