INVESTOR’S NOTEBOOK STEPHEN CRANSTON
There have been walkouts from large asset managers and there have been attempts to set up black economic empowerment managers out of large shops. The news that Momentum Asset Management as we know it today will become an independent majority black-owned business falls somewhere in between. Clearly the team, led by Sibusiso Mabuza, wanted more skin in the game and potentially will have more upside as controlling shareholders of the business, especially the four senior black staff: Mabuza; head of equities Patrick Mathidi; institutional marketer Lonwabo Dambuza; and Mishnah Seth, head of African equities.
But it also fits into Momentum’s new strategy of client-centricity. The life office accounts for a majority of the R62bn under management with which the firm will open its doors; but it has the right to take assets away after 12 months. Momentum Life will be able to spread its assets across different managers on a best of breed basis (to infringe Nedbank’s trademark). It can only be good for Mabuza’s team to work outside the comfort zone that is created by being the investment department of a life office. The long-term equity and balanced performance of the shop has been mediocre. Taking the Alexander Forbes Global Manager Watch, which is a good proxy for overall performance, the firm is 10th out of 12 managers though, to be fair, it has improved recently, coming fifth out of 12 over a year.
Is there a compelling reason to invest with the “new” Momentum Asset Management? It has a strong large cap fund, the Momentum Top 25, which is 10th out of 120 general equity funds over three years, but its mainstream equity fund is in the middle of the pack.
Momentum boss Nicolaas Kruger likes to point to Conrad Wood, the head of fixed interest, who was part of the dream team about 10 years ago when the firm was still known as RMB Asset Management with Jonathan Stewart and Paul Crawford. It’s true that the Momentum Maximum Income Fund is fourth out of 30 over the past three years, though it still has formidable competition from Sanlam, Investec and Nedgroup. Clients switch their fixed interest managers much less frequently than their equity managers. It is interesting to see none of the unconstrained solutions team, run by Sam Houlie, joins the new firm. And it is hard to predict its future: if the performance of Mabuza’s team has been soggy with occasional clear patches, Houlie’s has been a full blown Cape winter storm, with the Momentum Value fund the worst performer in the general equity sector on the 179th spot. It is a far cry from the then RMB Asset Management with such strong investment folk as Charles Booth, Richard Simpson, Royce Long, Stephen Brown and Mashuda Cassim and later small-cap guru Evan Walker, who built a strong small cap fund. Since he left, the track record has been driven into the dust. Of course, Mabuza will have the chance to recruit new staff and the change of culture to an independent might lead to better outcomes.
To clarify what I said in this column last week: All those people who wear Abercrombie T-shirts and sweatshirts will be bitterly disappointed to hear that Abercrombie Investment Management (AIM) is not an asset manager. It is described as an information service and the company through which Liston Meintjes does professional consulting. There was an Abercrombie Asset Management owned by AIM but it was sold in 2010. Meintjes assures me that AIM is not a financial services provider and has never carried out the business of asset management. Meintjes also points out that he is the head of investment at Sasfin, not the CIO.