Glass ceiling showing no cracks
ASSET MANAGERS: BEE CONTROLS 5%
None of the top 10 South African managers are black-owned.
The South African asset management industry hasn’t transformed as much as one would have wanted more than 20 years after democracy, an asset consultant says. According to 27Four Investment Managers’ 2016 BEEconomics survey, black asset managers only manage about 5% of the overall South African savings and investment industry.
Star performers
But an analysis of black-owned managers’ performance in the Alexander Forbes Manager Watch Surveys for the three years to December 31 last year, shows conclusively that black managers perform in line with their peers.
Rob Southey, head of asset consultants at Alexander Forbes, says of more than 130 SA asset managers, only 42 are blackowned. Of these, only two firms – Taquanta and Aluwani – manage in excess of R50 billion in assets. Twelve of them have amassed between R5 billion and R50 billion, while 28 manage less than R5 billion.
South Africa’s biggest asset managers manage in excess of R400 billion each – “a bit of an indictment”, Southey says.
None of the top 10 South African asset managers are black-owned, with the top five managing 52% of industry assets.
Southey says while one real black manager may have a poor B-BBEE rating, another manager may have a very good rating, but not really be regarded as a black manager due to the inner workings of the rating system. It should therefore be used with caution.
“It is nice to have and it is good to see but it doesn’t necessarily always tell the whole story.”
Regulation 28 of the Pension Funds Act notes that trustees should give consideration to black managers or B-BBEE, but does not explicitly define the term.
And it doesn’t end there. Southey says black asset managers starting businesses generally start with only one asset class, build up the capability and develop from there. This can be challenging.
In the unit trust market in particular the absence of a strong distribution framework can make it very difficult to grow the asset base.
Moreover, black managers often don’t have a strong brand presence, so investors don’t ask their financial planners to invest their money with these managers.
In turn, financial advisors may also be reluctant to recommend their products.
Southey says there is no doubt that trustees prefer brand names, but incubation can change this.
'Not charity'
He’s adamant that allocating funds to black managers is not about charity.
“These are managers that compete with any mainstream manager on their own right. It is just that they happen to be smaller, they don’t have a brand and then automatically consultants and trustees tend to be a little bit more cautious.”