The past week has been bruising for asset managers as they fielded queries from concerned investors about the collapse of Steinhoff. The main questions have been how much money has been lost and why they did not spot what appears to be massive corporate fraud. The first question is easy to quantify. The second is more complex. Sygnia manages assets by replicating the composition of JSE-constructed indices, such as the FTSE/JSE all share index. Hence we buy every share in that index, including Steinhoff. We do not research the companies themselves as our mandate is to precisely match the performance of the FTSE/JSE all share index. This method of managing money comes at a significantly lower cost as we do not employ an army of analysts to scrutinise financials. The additional advantage is that each product has exposure to a wide array of shares with no single share (apart from Naspers) playing a significant role in the performance of the overall product. However, few investors want t...
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