SA’s Asset Managers Transform: Race for Top Spot Intensifies

Asset Management

In a challenging year for active asset managers, with investors’ flight to safety causing massive outflows from riskier asset classes like equities, Ninety One managed to retain its position as South Africa’s top asset manager in 2022. Despite facing R65 billion in net outflows during the first half of its 2022 financial year, Ninety One held onto its crown, which it first claimed in 2021 after displacing Old Mutual Investment Group (OMIG).

  1. Despite facing challenges and massive outflows from riskier asset classes in 2022, Ninety One retained its position as South Africa’s top asset manager, with the Alexforbes Manager Watch Survey highlighting the ongoing competition among the top firms in the industry.
  2. The asset management industry in South Africa is experiencing a rapid transformation, with a strong focus on diversity and inclusivity. This shift is driven by pension funds, particularly those in the public sector, which demand increased black representation in asset management.
  3. The 2023 rankings are expected to witness significant changes as new entities like the largest black-owned asset manager, created by Sanlam and Absa Fund Managers, emerge. Additionally, consolidation and acquisitions, such as Sanlam’s Glacier acquiring Alexforbes’ retail client administration business, will further impact the rankings and industry dynamics.

The Alexforbes Manager Watch Survey, which analyzed the size of investment firms’ assets under management (AUM) up to 30 June 2022, revealed that Ninety One’s AUM had decreased to £132.3 billion (R2.9 trillion) by the end of September 2022, a 7% decrease from £141.7 billion in December 2021. However, Ninety One’s AUM remained stable at £132.4 billion by the end of December 2022, making it highly likely that the firm still holds its position as the largest asset manager in South Africa.

In terms of AUM, Ninety One managed assets on behalf of its South African clients that exceeded Stanlib Asset Management by R164.7 million. Standard Bank’s latest financial results showed that Stanlib’s average AUM stood at R644 billion at the end of 2022, R29 million higher than at the time of Alexforbes’s survey.

According to Janina Slawski, Alexforbes’s head of investment consulting, Ninety One’s rise to the top in 2021 generated considerable excitement about the power shifts in the local asset management industry. She added that OMIG’s restructuring of assets contributed to their dramatic drop in the rankings.

The 2022 rankings saw Stanlib maintaining the second position, while Coronation slipped to fourth place, making way for Sanlam Investment Managers (SIM) to advance from fourth to third place. Allan Gray and OMIG remained in fifth and sixth place, respectively. Rounding out the top ten were Alexforbes Investments, Nedgroup Investments, Sanlam Multi Managers, and Taquanta.

Aluwani Capital Partners made its first appearance in the list of top 20 asset managers. However, the 2023 rankings are expected to experience another shakeup as Sanlam and Absa Fund Managers created South Africa’s largest black-owned asset manager in December 2022, with over R1 trillion in AUM. Additionally, Sanlam’s Glacier has finalized its acquisition of Alexforbes’ retail client administration business, aiming to become the largest LISP platform in South Africa.

Slawski expects the consolidation of Absa Fund Managers and SIM to form the second-largest asset manager by the end of 2023, unless Stanlib makes a significant move.

A notable trend in the industry is the drive for transformation, with all but one of the country’s top 20 largest asset managers now being Level 1 BEE contributors. In 2021, seven of the top 20 asset managers were below BEE Level 1, including SIM, Stanlib, Coronation, Futuregrowth, and Absa Asset Management. In 2022, only Fairtree Asset Management was a Level 2 BEE contributor, with no asset managers with lesser empowerment status making the list.

Over the past year, numerous historically white-owned firms have announced significant black-ownership deals, with SIM and Old Mutual’s Futuregrowth being notable examples. The industry’s rapid embrace of transformation is driven by pension funds, particularly those in the public sector, which demand increased black representation in asset management.

Slawski commented on the trend, stating that public service clients are increasingly seeking high levels of BEE ratings and black ownership in their asset managers. These clients exert considerable pressure on consultants to find managers that prioritize transformation. Investors are becoming more concerned with ensuring that their assets are managed by diverse and transformative teams.

This ongoing transformation in the South African asset management industry is expected to continue influencing the rankings and dynamics among the top firms. As more companies prioritize diversity and inclusivity, the competition for the top spots will intensify, making the industry more dynamic and representative of the broader South African population.

Overall, the South African asset management landscape is changing rapidly due to shifting investor preferences, regulatory requirements, and a strong focus on transformation. The battle for the top positions in the industry is likely to continue evolving as firms adapt to these new expectations and challenges. Stay tuned for more updates on the industry as it navigates this period of significant change and growth.

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