SIBONISO NXUMALO: SA asset management industry cannot solely rely on local markets

In today’s world, globalisation touches every aspect of life — from the products we use daily to the devices and technology that power our lives. Globalisation isn’t just happening in far-off countries; it’s right here in SA, shaping the future of every industry, including asset management.

At a recent presentation at the Institute of Retirement Funds Africa conference, I shared how globalisation affects us all. I woke up in a bed manufactured in one country, used a phone designed in California and made in China, and watched a TV from Korea. This is the global reality, and now it has arrived to reshape the investment industry too.

Much like what happened in Britain, SA asset managers are now feeling the long reach of globalisation. If they want to thrive and meet their clients’ long-term goals, they must evolve into global managers. The local asset management industry can no longer rely solely on SA markets, particularly with the shrinking of the JSE and the increasing offshore returns generated by local companies. To remain relevant, SA managers must embrace global strategies, adopt new technologies and build processes that allow them to compete on a global scale.

Historically, SA asset managers focused on local opportunities, but the global investment landscape has shifted dramatically. Regulation 28, which increased the offshore investment limits for local pension funds, has opened up vast new opportunities for SA managers. With R4.6-trillion in assets under management, this increase allows more than R2-trillion to be invested in overseas markets. This trend mirrors what happened in the UK, where local pension funds gradually reduced their home bias as the domestic market shrank.

For SA managers, the message is clear: to survive in this globalised world, they must transform into global players. Just as globalisation has affected our daily lives, it has also created new expectations for investors. Clients are no longer satisfied with purely local investments — they want access to global markets and the opportunities they present. This is especially important as the JSE continues to shrink, and the majority of its earnings are generated outside SA. Globalisation has come to asset management, and SA managers must adapt or risk being left behind.

SA managers must now look beyond local borders to deliver the best outcomes for their clients. The changing regulatory environment, combined with the shrinking opportunities within the domestic market, means that going global is no longer optional — it’s a necessity. By adopting a systematic, quantitative approach, it is possible not only to compete but to thrive in a globalised world. Old Mutual has developed scalable processes and invested in the right talent to ensure that strategies remain competitive on a global stage.

As SA follows the UK’s trajectory of reduced home bias and increased reliance on offshore earnings, local managers must evolve into global managers. We believe that through innovation, data-driven strategies, and a willingness to embrace global opportunities, SA managers can continue to deliver value and outperform in this highly competitive space. Globalisation has changed the rules of the game, and it is up to us to ensure we stay ahead.

• Nxumalo is chief investment officer of Old Mutual Investment Group.