Financial sector still locks out black asset managers
Black asset management firms still manage only 6% of all savings and investments, and 0.8% of unit trust assets in SA, according to the latest survey on transformation in the asset management industry released on Wednesday.
The report is an indictment on SA’s financial sector and shows that 24 years since the official end of apartheid, the sector is still structured to prevent meaningful participation of black firms and is not supporting the country’s developmental agenda, said Fatima Vawda, founder and MD of 27four Investment Managers, which published the report.
Asset managers take individual investors’ and pension funds’ money and invest it in asset classes such as stocks, bonds and private equity.
27four is one of the investment managers that has been vocal about the lack of transformation in the sector and holds a seat on the Association for Savings and Investment SA (Asisa) board. It has conducted this survey for 10 years.
"Apart from the large funds like the PIC [Public Investment Corporation], everybody else is not supporting black asset managers," she said.
The report showed that of the R8.7-trillion assets under management in SA, about R5-trillion is available for management by the private sector, but only R490bn is managed by black firms.
While there are 48 black-owned asset management firms, only two — Taquanta Asset Managers and Aluwani Capital Managers — manage assets in excess of R50bn.
Vawda said challenges include underrepresentation of black firms at the asset consultancy level. This is where decisions about which managers to invest pension funds with are actually made.
She also pointed to the need to develop black professionals’ skills so that they can tackle other asset classes instead of concentrating on equities.
But most importantly, she said, the structure of the sector, including the lack of access to capital and dominance of a few large companies, has presented the most barriers to market access.
But Vawda also criticised the black firms for not pulling their weight behind developmental funds to benefit 70% of public servants whose pension fund savings make up a big portion of assets under management, but cannot even afford to own their homes.
"Unfortunately, asset managers — in everything they do — are not aligned to the National Development Plan or the UN sustainable development goals," she said.
Black investment professionals’ representative body Absip called for regulatory changes that will compel retirement funds to allocate some savings to black firms. "We can’t continue moving at the pace we’ve been moving," said its president, Sibongiseni Mbatha,
The EFF’s deputy president, Floyd Shivambu, said until black firms play in the whole value chain — from asset owners to asset consultants, asset managers and stockbrokers — they would continue to be sidelined.
"I don’t buy the argument about the skills deficit.
"The PIC is run by black professionals and it has performed above the Swiss index."
Trevor Chandler, senior policy adviser on transformation at Asisa, said "the bulk of assets under management come from retirement funds and as an industry body we have no influence on where those assets are allocated. In the end the client makes decisions about which underlying funds to invest their money in."