Mazi has a different window on the world and it pays off in returns and awards
Mazi Capital — the name signifies a cow, nurturing, unlikely to run from responsibility like her male bull counterpart — has quietly scooped its third Morningstar award for best SA equity fund in four years. That’s no small achievement for a boutique black-owned asset manager, up against the big players of the investment world. Business Day asked chief investment officer Malungelo Zilimbola what the award means for the team.
The most important thing is consistency in performance. [The award] is risk-adjusted, which means that for every return generated you’re taking less risk. To minimise losses is one of our big drivers. We’ve won the award three times out of the last four years. It tells you our process works. The team is gelling, we work well together.
Team, process and being rigorous — I think those are the elements that added to the consistency. What were some of your top holdings?
One of the big holdings we had and have had for a while is Cashbuild. It’s one of those companies that at the time was ignored. We bought the stock at R21 [it’s now over R400]. Then we had Naspers ... some other high convictions were Old Mutual. And on the bank side, FirstRand, Capitec and Investec. Did you have any Steinhoff?
We did, but not too much. We lost about 70 basis points.
Have you had any disaster picks? I know you had a big chunk in Ellies at one stage.
Yes, absolutely. Another was Mr Price. When they came out with a profit warning and the stock took a big pounding, we lost some money there. And in 2016, when resources rallied,
Anglo [American] went up 200% and we were underweight in the stock. At that point we couldn’t justify buying them and it went up 200%. We were in Billiton; it did 10%.
You tweeted about being an ignored asset manager — are you or is it because you choose to fly under the radar?
We’re not a listed company, so being under the radar from that point of view is great. And media, we’re very circumspect, we’re not out there talking about everything that we do, so we choose our engagements. Why?
For me, when you do that you cheapen the brand. Everything you say, there has to be substance behind it. If you phone me and ask me a view for a company and I get quoted, there’s no context. [But] one of the big issues for us is getting into the independent financial adviser ) market.
We’ve got a very good base in the institutions. We’ve got a fund it’s more than 10 years old, it’s winning awards, but we’re not gaining that traction in terms of flows in the unit trust space. How are you going to change that?
27four has published research showing how little budget some black asset managers put to marketing .... We ran a campaign for most of 2016 on Power FM. It’s too early for us to go on television or airports ... we don’t feel we’ve been bad in spending but we’ve been selective. What are present assets under management?
We’ve got R47bn across different products. We see ourselves as an alpha house, in terms of giving good performance and if too much assets hamper that we’d look at capping our asset base. The R100bn number makes a lot of sense.
At R47bn you’re still small to boutique. Very few black asset managers have hit R100bn, especially on the equity side. So we want to break the glass ceiling but at the same time we don’t want to have too much money. It’s going to go back to your question again: why did you say you’re ignored (laughs).
Would you want to see more black investors choosing Mazi, and do they?
That’s a critical question. Generally, there’ve not been good examples of successful black asset managers who have been consistent over a long period, to give that confidence.
If you give somebody your money it’s the ultimate expression of trust. At what point do we say that we’ve unequivocally proven that we can do it? I think my experience is that [among] institutions we’ve proven ourselves. But if you look at the retail market it’s not clear in my mind that we’ve got that absolute confidence.
We’re also not targeting the “black market” per se. For me, the demographics of PowerFM I see as very cosmopolitan, upwardly mobile, very economically active — those are the demographics we’re after. Do you think that as a black asset management firm you have a different philosophy to the entrenched players?
When you take Steinhoff, for example, and you look at the board and guys that have been friends for a long time — do these guys challenge each other? Socially they’re together, in board meetings they’re together; there’s no dissenting voice. When you talk about transformation, we say get somebody that will give you a different view... not because I’m black but because I grew up differently. And the lenses with which I look at things are different.
That’s what SA is lacking. As a country, we’ve not harvested that diversity dividend. And the networks as well: imagine an investor that puts money with a manager that thinks the same way. So the Coronation and Allan Gray guys are mates, they cycle together, they share ideas and guess what: their portfolios are going to look the same.
If you’ve a Mazi guy that lives in Joburg, doesn’t go cycling and on weekends I go to the rural areas, I’m going to come up with a different portfolio. Is it prudent for a client, a pension fund, to put money with the guys that think the same way? You could see, especially in 2017, where everybody went very negative and maxed-out rand hedges with the fear of what was going to happen in December, whereas we had a pragmatic view given who we speak to.
So not us hysterical Parkview types?
There you go. It adds diversity of thinking.
WE’VE GOT A FUND, IT’S MORE THAN 10 YEARS OLD, IT’S WINNING AWARDS, BUT WE’RE NOT GAINING TRACTION THAT’S WHAT WE ARE LACKING. AS A COUNTRY, WE’VE NOT HARVESTED THAT DIVERSITY DIVIDEND