Breaking into the boys’ club

Asset consultants are seen to be reluctant to funnel retirement money to firms that aren’t established players

Black asset managers now control about R416bn of SA’S savings and investments industry, a 27four Investment Managers survey set for release next month will show.

That may sound like a lot, but it’s still less than 10% of the total R4.6 trillion pool managed by the private sector.

Between 2016 and 2017, assets managed by black-owned firms grew by less than R8bn.

For Aeon Investment Management chief investment officer Asief Mohamed, this slow growth indicates that asset consultants are still reluctant to funnel retirement money to firms that aren’t establishment players such as Coronation, Allan Gray, Investec or Prudential.

Says Mohamed: “The private sector has been very absent and they’ve not really moved money to black asset managers at all. And I would say it’s the consultants — the gatekeepers in this industry.”

That’s understandable, to some extent. The big asset managers have much larger marketing budgets, against which boutique firms can’t really compete.

But there’s a more unsavoury element to the lack of chances being given to black players.

“We have a track record of nearly eight years and they [the asset consultants] won’t put us on the short list or even consider us, but they will [take] a guy who’s based in Bellville with just a oneyear track record and give him loads of assets,” says Mohamed.

“I can tell you many, many stories in this industry where these things happen, and I personally think it’s racism. And, by the way, it’s not just white people in these organisations — it’s the black people also. They have this belief that black people can’t manage money

. . . it happens all the time. It’s that phenomenon that once people get up the ladder right to the top, they take the ladder away so nobody else can come up.”

Mohamed is keen to see the “investment value chain” moving to reflect SA’S demographic. At the moment, the gatekeepers, as he calls them, are firms that have been in the game for many years: Alexander Forbes, Riscura, Novare and Willis Towers Watson.

For its part, Riscura says: “The decision whether to use a particular manager is ultimately the responsibility of each client.”

But, the company says, “to date, Riscura clients’ allocations to black managers have grown to approximately a third of the widely published estimated R400bn in assets invested with black managers”.

Alexander Forbes says it has “recently adopted a policy that will ensure the inclusion of black managers . . . the policy outlines a minimum . . . to be allocated in the short term and an envisaged higher allocation in the longer term”.

27four Investment Managers believes there has been considerable growth in the number of black asset managers in the market — doubling to 45 in eight years.

Aeon credits the Public Investment Corp (PIC) with helping nurture black firms. “From our perspective, [the PIC has] been a big supporter. The problem is if you speak to some of the other asset managers who don’t have PIC money, they’ll probably have a [different] opinion,” says Mohamed.

“But in [the PIC’S] defence, [it] can’t give every asset manager funds to manage. [It has] been extremely supportive and only [takes] away money after a long period of underperformance — [it’s] quite patient in what [it does].”

I can tell you many, many stories in this industry where these things happen and I personally think it’s racism Asief Mohamed