Peter Armitage. Picture: RUSSELL ROBERTS
Peter Armitage. Picture: RUSSELL ROBERTS

Wealth management firm Anchor Group grew its funds under management by almost a fifth in 2019 despite investors ditching equities for safer assets.

Anchor, which reported its full-year results to December on Friday, managed to grow its funds under management by 17% to R57.4bn. Adjusted headline earnings were down 9% to R69.4m for the period.

Anchor, headed by Peter Armitage, said it saw record demand for fixed-income assets, which include securities such as bonds, during its year to end-December, with this weighing on its profit margins.

Independent analyst Anthony Clark said the group’s financial performance was astonishing given widespread turmoil across global markets.

“Given the environment we’ve seen in the last six months and significant declines in the valuation of JSE stocks, as well as the trading capacity of clients, people have not been trading as much. The fact that they’ve managed to grow their assets under management by 17% is astonishing,” Clark said.

“In a weak economic environment, in a weak stock market, to actually curtail a drop in earnings by 9% is actually a very good scenario,” he said.

The company said it was experiencing the most difficult investment environment in decades, with economic confidence and market sentiment at low levels, all made worse by the coronavirus outbreak.

It said net assets under management and administration grew by  R8.47bn, including the R2bn contract termination for the deconsolidation of Astoria Investments.

For private clients and asset management, the company added about 2,000 new clients. Funds under management were R35.4bn and assets under advice stood at R22bn. Offshore assets were R16bn.

Anchor group, whose long-term strategy is to become a key player in SA’s asset and wealth management market, is looking at strengthening its focus on offshore investment.

“They charge a fee based on the asset under management. With the rand having weakened substantially against many European countries and offshore currencies, the percentage fee that they will collect, year on year, will rise because the offshore assets are worth more in rands, and that will assist,” Clark said.   

According to Clarke, Anchor will see a slight loss to its overall margin as a result of lower fees charged on offshore assets.

“Offshore assets do tend to charge, generally, a much lower, or a slightly lower performance and management fee than domestic assets,” he said, adding that Anchor, with its growing offshore business, would see a “slight loss to its overall margin”. 

He added that the group’s priority should continue to be its focus on marketing and distribution.

“Given that the stock market has fallen so sharply, Anchor’s key focus today has been distribution and marketing. They have been pulling, on average, R400m to R500m a month in new money. That’s purely because of distribution and marketing.

“I would expect that, going forward, they spend more time on distribution and marketing and to continue to expand their offshore interests,” Clark said.

thukwanan@businesslive.co.za