Ready to push the boundaries out
Firm has no ambitions to be huge, but is confident it can deliver on a bigger scale
Emperor Asset Management (EAM) is the yardstick by which to measure Purple Group’s evolution from an investment and private equity company created by Mark Barnes in 2005. The intervening decade has seen the group evolve into a niche asset management and trading player.
Group CEO Charles Savage acknowledges that Purple is a small and relatively unknown group, but says this profile is changing steadily as the performance of its asset management products has started to garner interest and attract funds. Emperor Asset Management represents Purple’s most significant diversion from derivatives trading, operated through GT247.com, which was the mainstay of the group until 2010.
It was at this time that Savage was approached by Tom de Lange, who was looking for a partner to add stability and scale to his small asset management firm. Savage admits to initial reservations about entering the asset management business unless it offered distinct value to investors and complemented the Purple Group vision.
In the end, De Lange’s consistently strong performance record of annual return rates of about 23% and his pioneering quantitative momentum-based approach won the day. EAM emerged from this amalgamation of businesses, but it was another year before it was ready for the market. Much time was spent building Emperor’s investment offering, technology base and client-related services to ensure the business was robust and scalable enough to meet the requirements of both mass retail and institutional clients.
Today Emperor comprises three distinct product offerings, including segregated portfolios, unit trusts and a hedge fund.
The mainstays are the segregated portfolios composed of the Robert Falcon Scott Strategy and the Sir Edmund Hillary Strategy. Both have adopted a quantitative, momentum-based investment style focusing on 140 of the most liquid JSE shares. The former — launched in October 2004 — has an enviable 10-year track record and deploys a predominantly long strategy, while the latter is a long/short strategy and has been in the market since June last year. Though the performance of these strategies is of utmost importance, Emperor has adopted an approach of complete transparency with its clients, providing each with a daily statement reflecting the performance of their portfolio.
Catering to the more traditional investment-minded, the asset manager launched its Emperor IP Momentum Equity unit trust fund in September last year and during the first part of this year introduced the same unit trust in the form of a tax-free savings account.
Finally, EAM launched its first hedge fund on November 1 2014, appealing to more sophisticated and institutional investors.
“EAM has been a great
success, in the sense that we have been quietly going about growing our assets at a steady but moderate pace. We are now approaching the point at which both retail and institutional investors are starting to show increased appetite and interest in what we’re doing,” Savage says.
“We are building out an ‘alternative’ asset manager that has a true retail distribution platform, aligned with our more traditional investment business through unit trusts. Most of our business is in segregated portfolios and more specifically in strategies that are dedicated to meeting the higher risk, higher return requirements of investors.”
He says EAM manages more than R620m in assets for about 2 500 customers. This asset base has grown from R20m when the business was created in 2010.
Two international funds will be launched this year. This will help the group to support its clients’ investment needs and grow assets under management.
“R2bn assets under management seems to be the tipping point for an asset manager and our focus is on achieving this kind of scale. We’re a small, boutique manager and we have no aspirations to be a mega manager. However, we’ve tested our investment strategies’ capacity to deliver similar returns on a bigger scale; hence we are confident that we have huge capacity to grow assets under management without a negative impact on returns, which is great news for our business and our clients. Our plan is to remain focused on and grow our retail client base aggressively, ensuring our service levels and approach are never compromised, while attracting institutional clients.”
To achieve this, Emperor will be targeting independent financial advisers. Savage says that 90% of the business to date has been acquired directly, but that marketing through advisers will enable it to ramp up client acquisition.