Joburg’s edgy equity funds

STEPHEN CRANSTON

ape Town is still the centre of the SA fund management industry, and chances are that when you choose an equity fund it will be one of the large players such as Investec, Allan Gray or Coronation.

But there is a growing hub of managers in Joburg that are taking them on, and the majority of BEE managers, such as Mazi Capital, are based in Gauteng.

This week we look at five funds run from Joburg. It might not have some of the physical attractions of Cape Town but it is much closer to the majority of head offices and the majority of clients, whether institutional or high net worth.

Sasfin is establishing an interesting niche operation based around the old Frankel Pollak private client business it acquired. Most of us still associate Sasfin with leasing photocopiers, but in a few years, who knows? Sasfin is likely to build a more institutional profile since Errol Shear joined in from Absa about two years ago. His performance at the Absa Absolute Fund (and at a similar fund at Stanlib before that) makes his BCI Stable Fund a solid choice. His Opportunity Equity Fund looks interesting and worth a side bet.

The demise of RMB Asset Management was a blow to the Joburg investment community, though the team have spread out into a galaxy of managers — Stephen Brown and Paul Crawford to Fairtree; Mashuda Cassim to Cachalia Capital; and Royce Long and Richard Simpson to Obsidian.

RMB’S successor, Momentum Investments, is going into pure multimanagement.

CBut right now it is Andrew Vintcent at Clucasgray who is knocking it out of the park. In the Morningside SA Equity category he is second only to the personality cult fund known as Aylett Equity. Vintcent has just R1.6bn under management but he shares a team of 10 investment analysts with the R7.5bn Clucasgray private client business.

The fund doesn’t just focus on the lumbering large caps and it is small enough to take weighty positions in the likes of Reunert and Clover. This fund is a much more mainstream core equity fund than the Clucasgray Future Titans run by Brendon Hubbard, which in Strictly Come Dancing would be considered a show dance whereas Vintcent’s fund is more of a waltz.

Ashburton has in some respects filled the void left by the demise of RMB, as it is also wholly owned by the Firstrand Group. It often seems like a federation of businesses, in the mould of Fairtree, with a strong Africa equity business, an established multiasset private client business in Jersey and a fixed income shop in Cape Town (it might not be called Atlantic any more, but clients won’t be able to tell the difference).

Ashburton’s SA equity fund is run out of Merchant Place in Sandton from the same building as the old RMB, a suitably intimidating place. Like Claridge’s in London it has a lift man to take you to the offices. In fact, the traditional equity and balanced portion of Ashburton is quite small. The Equity Fund is just R435m but it probably deserves a larger market share.

Absa would have taken RMB’S No 2 position in Joburg — Stanlib is the largest — but its key balanced team of Kurt

Benn and Greg Kettles are in Cape Town. Absa has weathered the trauma of the loss of Shear and has a competent equity team run by Stephen Arthur and Dale Hutcheson.

It has a confusing lineup of three SA equity funds — this month we look at the Prime Equity Fund, which has joined the general equity sector after many years in the somewhat moribund large-cap sector.

A short walk from the Absa offices in Alice Lane are the offices of Laurium Capital, which couldn’t be more different. Murray Winckler and Gavin Vorwerg had hoped to focus entirely on hedge funds but over time they have rolled out the main long-only funds, from a highly regarded flexible fund to a balanced fund and equity fund.

After the appointment of JP du Plessis, formerly with Prescient, as fixed income manager, Laurium was able to roll out a stable fund in December. But stock picking remains a core skill of the house and the Equity Prescient Fund is an excellent shop window into this.

Joburg might not have some of the physical attractions of Cape Town but it is much closer to the majority of head offices and the majority of clients