Fund management is

evolving fast from its roots at the investment departments of life companies. In fact the move away from life companies has continued.

These lumbering giants continue to lose market share — notably Momentum Investments, which has shed most of its third party assets over the past three years. Attempts to invigorate the businesses with new brand names have mostly been laughed off by potential clients — with a few exceptions such as Old Mutual’s high-quality Electus team.

Allan Gray and Coronation have been growing so rapidly that they are no longer taking new institutional balanced or equity mandates. With just unit trust sales to rely on, their growth in market share will slow down — but with more than R700bn under management between them they will both remain hugely profitable. However, they are leaving a gap for their competitors — Prudential, Foord, RE:CM and Investec, in its many guises — to take up most of the slack.

What is surprising is how the number of asset management firms continues to increase with little sign of consolidation. Some firms can get to break even quite quickly if they have the right black economic empowerment credentials. But by international standards they are subscale — and perhaps would be better suited to move into a cottage industry such as hedge funds.

Many of these firms are supplied a lifeline in terms of a R2bn mandate from the Public Investment Corp (PIC), with BEE managers account for most start-ups But current trends favour large firms