SA brands bigger than their managers

The UK’s Neil Woodford enjoyed star fundmanager status until his dramatic fall to earth. SA has moved beyond star managers and focuses more on companies or brands and their track records, says Pieter Koekemoer, Coronation’s head of personal investments. The Allan Gray, Coronation or Investec brand is now much more important than individuals, he says.

SA used to be focused on picking the managers who oversaw winning portfolios, but hard lessons have been learnt and investment professionals have realised the value of multi-asset funds typically managed by teams. In this way, the local market is a lot more sophisticated, less star-manager driven and ahead of the UK market, Koekemoer says.

Morningstar senior portfolio manager Victoria Reuvers says SA has star brands rather than star individual managers. Historically star managers such as Piet Viljoen, Dave

Foord, Shaun le Roux and John Biccard delivered great returns.

There are pros and cons to brands being stars, she says. Allan Gray has displayed excellent long-term returns to investors and good stewardship, backed by a consistent and defined process. Its star status means investors stay invested and don’t chop and change on bad short-term performance. Trust in the brand and process has kept investors invested, which is ultimately to the brand’s benefit. However, the disadvantage is investors do not question the high fees, and as a result, the manager has no incentive to reduce fees for end investors.

SA asset managers all act differently when it comes to who manages the fund, says Sangeeth Sewnath, deputy MD of Investec Asset Management. Investec does have star managers, such as Clyde Rossouw, Gail Daniel and Biccard, but the company also makes use of coportfolio managers.