Specialised financial services group Sygnia, which was founded by Magda Wierzycka, says it is benefiting from providing low-cost and diversified products.
Speaking to Business Day, after shares in the company surged as much as 16% on Wednesday to close at R9.40, Wierzycka said Sygnia was seeing the benefits of not being singularly focused on asset management.
“It’s the diversification of the company and our business lines that have been very helpful in this environment as opposed to being an asset manager where your revenue is really just tied to the assets that you’re managing,” Wierzycka said.
Sygnia runs equity funds, financial administration services, foreign exchange trading, savings products and umbrella funds, which are made up of multiple funds.
The asset management industry has been rocked by threats of a deep global recession as markets were battered by a sell-off caused by fears of the fast spreading coronavirus. Consumers’ purses have shrunk and unemployment levels have risen, pushing clients to cash out their investments.
“The other thing that I think has been good for us as a company is the fact that we genuinely have the lowest cost as an asset management provider in SA, focused on passive or index tracking asset management. We’ve always known that the time of passive management will come and its starting to happen,” said Wierzycka.
On Wednesday, Sygnia said headline earnings could increase as much as 105% to 65c per share when it reports its interim financial results to end March next month.
Rival Coronation Fund Managers reported a rise in net outflows of about R22bn in the six months to March on Tuesday.
Sygnia, which manages funds worth R235.9bn, has been on a drive to grab the market share of competitors Coronation and Allan Gray with its low-fees strategy.
“We’re not benefiting from organic growth of the industry. We’re more benefiting from money flowing to us from competitors. …Our strategy, because we can see the economics of SA, is to attract money from competitors; that must be because the savings pool in SA is not growing,” she said.
Wierzycka said she doesn’t expect a V-shaped, or steep but short period of economic decline and recovery, saying that any prospect of that had been eliminated.
“I think that fundamentally from an economic perspective, we’ve kind of been pushed over the edge by this [coronavirus], we were kind of on the cliff in terms of Covid-19, we’ve been pushed over the cliff with Covid-19 and the credit ratings downgrade,” she said.
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