SA’s biggest asset managers are now Level 1 BEE-compliant
• 2022 Alexforbes survey shows that 19 of SA’s 20 largest fund managers achieve goal, 46% up over previous poll
Virtually all of SA’s top 20 asset managers now have top-tier BEE status.
The latest Alexforbes Retirement Fund Survey, which was compiled in June 2022, found that 19 of the top 20 fund managers ranked by assets under management (AUM) are now considered Level 1 BEE contributors, a 46% increase from the previous survey. Moreover, all of the top 10 asset managers in the survey had the highest BEE rating of Level 1, meaning they meet the most stringent regulatory requirements for black ownership, procurement, employment equity, and enterprise and supplier development.
“This says a lot about the commitment of the asset management industry to transformation,” said Janina Slawski, head of investment consulting at Alexforbes. “This certainly shows hugely positive progress as well as commitment from the industry which is definitely what the regulator was looking for. There’s a strong request from institutional clients for transformation as well.”
SA asset managers have been under pressure to boost the participation of black-owned companies with deputy finance minister David Masondo having warned since at least December 2020 that regulators would be vested with additional powers to boost the pace of transformation. In February 2022, the Financial Sector Conduct Authority (FSCA) also outlined proposed legislation changes that would grant the regulator power to impose administrative penalties on companies that failed to meet transformation targets.
While a total of 90 asset managers participated in the 2022 Alexforbes Retirement Fund Survey, only 77 were ranked for their BEE credentials. Of those 77, the number that were deemed to be Level 1 contributors totalled 49, up from 36 in the previous year’s survey.
Level 1 and 2 BEE-rated asset managers also held the bulk of client funds with the asset distribution in 2022 between these groups being 92% and 2% respectively. This compared to an asset distribution of 65% for Level 1 BEE contributors and 29% for Level 2 fund managers in 2021, reflecting the improvement in the industry’s transformation credentials.
“There has been a strong push from asset managers to become Level 1 contributors,” said Don Andrews, the head of Alexforbes’ survey team.
The June 2022 Alexforbes Retirement Fund Survey, which looks at assets owned by SA clients only, shows that Ninety One is again ranked the biggest local asset manager with
R779.48bn in AUM (excluding the funds of non-SA clients). Stanlib remains in second spot with R614.8bn in assets from SA clients, though that’s a 5% drop since 2021.
Sanlam Investment Managers (SIM) leapfrogged Coronation into third spot with a 3% increase in assets to R546.95bn in SA client assets. Fairtree Asset
Management, which was ranked 16th with R114.82bn in SA client assets, was the only top 20 fund manager that did not have Level 1 BEE status, instead having only achieved Level 3.
Alexforbes Investments was again ranked SA’s biggest multimanager, falling into seventh position with an overall local client AUM of R345.83bn. Multimanagement is a strategy that allows firms to combine a variety of asset management products spanning different asset classes and investment styles into a single portfolio.
The growth of assets managed by multimanagers, relative to those overseen by single fund managers, has been steady over the years. In the 2016 survey the AUM split was 86%-14% in favour of single managers while in 2022 multi-managers had grown their share to 20% with the balance in assets overseen by single fund managers.
The 2022 Alexforbes Retirement Fund Survey also found that despite the Treasury having increased the offshore allowance for retirement funds to 45% of assets, from 30% previously, the bulk of money managers had not taken more money overseas. In fact, the average exposure to international assets among participants was 29.9%.
THIS SHOWS HUGELY POSITIVE PROGRESS AS WELL AS COMMITMENT FROM THE INDUSTRY WHICH IS WHAT THE REGULATOR WAS LOOKING FOR
Janina Slawski Head of Alexforbes investment consulting