Sygnia has grown assets under management and administration during a year in which rivals are blaming political and economic upheaval for a plunge in assets, its results for the year ending September show.
The asset manager’s assets grew 16% to R184bn, the result of its “defensive” investment performance and the acquisition of the erstwhile db X-trackers exchange-traded fund (ETF) platform, which added R12bn in assets. The platform now operates as Sygnia Itrix.
Sygnia financial director Mike Buckham said after the release of the results that assets from the db X-trackers platform had since grown from R12bn to R14bn, boosted by R1.1bn in new investments and R900m in market returns.
Sygnia’s negative view of SA’s political landscape, marred by allegations of state capture and unwillingness on the part of the prosecution authorities to act against this, resulted in the company implementing a risk management and diversification process that boosted its returns.
This included tactical asset allocation strategies in its active funds and capital preservation through funds of hedge funds.
Assets managed on behalf of institutions such as pension funds grew 9% to R159.7bn, benefiting from growing demand for passive investment strategies (these contributed R32.1bn to assets). Employers also flocked to the Sygnia Umbrella Retirement Fund (Surf).
Sygnia expects more stand-alone retirement funds to sign up for Surf after the Treasury introduced default regulations in August, which requires more reasonably priced “first line” investment portfolios for retirement fund. Retail assets more than doubled to R24.3bn.
“Sygnia’s results were at the top end of expectations and frankly blew most of the market out of the water, with a 25% increase in headline earnings per share to 69.72c [and] a healthy 60c dividend for the year,” said Anthony Clark, analyst at Vunani Securities.
He upgraded the share to a buy in October at a target price of R8.90 per share on expectations that it would deliver a better performance.
The share has surpassed that level since then and hit R13.89 in Friday afternoon trade.
“I’m forecasting a much better period for Sygnia in 2018 as the benefit of the db X-trackers deal for the full year, new mandate wins in its core Surf and index tracking segments and ongoing cost control see continued strong double digit earnings,” Clark said.