Let the black stars shine
n spite of some of the largest SA pension funds’ support, black economic empowerment managers still battle to achieve critical mass. In the private sector, institutional market trustees demand well-known names, and brands are even more critical in the unit trust market.
Though I look at managers quite regularly, I wouldn’t consider Balondolozi, Benguela or Mianzo to be top-of-mind brands. Argon is better known in the industry thanks to the flamboyance of its former boss, Mothobi Seseli, but that’s not quite enough to confer brand status. Even the more established businesses are barely known to the retail public. Taquanta is the Intel inside most of the Nedgroup fixed interest funds, but it is buried quite deep inside.
Kagiso has its own funds, and for years its Equity Alpha fund was the best in SA. Yet its assets are predominantly in pension funds. Sadly, the retail market is still controlled by a closed shop of predominantly white advisers who are reluctant to move out of their comfort zone of Coronation, Investec, Foord and Allan Gray. Even other “white” businesses such as Sanlam, Old Mutual and Stanlib have been ignored.
Though many BEE managers are quite new, their investment professionals have established records. Asief Mohamed was one of a quartet of early black fund managers in the 1980s, along with Shams Pather (who has not done too badly as chairman of Coronation), Imtiaz Ahmed, who switched to hedge funds, and Adam Ebrahim, who runs Oasis, the institutional balanced market’s most competitive BEE manager. Oasis refuses to participate in the Alexander Forbes and 27four BEE surveys.
The BEE manager universe is seen to have the same kind of relationship to the mainstream managers that Alt-x has to the main board of the JSE.
IAnother refusenik is First Avenue. I suppose that founder Lo Giyose chose the name to reflect his international aspirations, rather than a much catchier Zulu or Xhosa name. There is no shortage of good returns from the BEE managers. From the initial quartet other stars have been born, such as Malungelo Zilimbola at Mazi, Delphine Govender at Perpetua, Mashuda Cassim at Cachalia and Kelebogile Moloko at Prowess.
Creditable returns
Aeon has been the best of the six BEE balanced funds, with a creditable 7.45%/year return in flat markets. There is quite a bit of key-man risk around Mohamed, so as a trustee I would still be reluctant to shortlist Aeon. It should change the name, anyway, as most consultants might think he was there to sell cover as part of the multinational insurance broker Aon. One shop I would consider is Kagiso, which has a broader team and wasn’t that far behind at 6.9%.
The Public Investment Corp is the largest supporter of the BEE sector and it has said it would prefer to support a “black Coronation” than a string of subscale businesses. It would be a disaster to force some firms to merge; the personalities and investment styles would probably be incompatible. Perhaps the champion will emerge organically.
The trouble is that many fund managers believe they can grow without marketing. Allan Gray used to be cosy and marketing free, but it was also tiny. It was only when it employed sales professionals such as Jeanette Marais that assets exploded. Coronation would be smaller without the foundation of assets gathered by Magda Wierzycka.
I look forward to meeting the “black Jeanette” or the “black Magda”. The BEE manager sector certainly needs one.
If you fit the description, please let me know.
Though many BEE managers are quite new, their investment professionals have established records