Even in a time when we get our information online, I look forward to the arrival of the Alexforbes Manager Watch annual survey.
I worked closely with members of the Forbes asset consulting team from the days when Rael Gordon, and later Leon Greyling and Ralph Frank, ran it.
Along with Willis Towers Watson under Ant Lester, this team must take credit for spearheading the growth of the independent asset management industry over the past 30 years.
The 30th anniversary edition of the Manager Watch annual has just arrived, and for this occasion it interviewed three industry veterans — Asief Mohamed from Aeon, previously with Metropolitan; Natalie Phillips from Investec/Ninety One; and Errol Shear from Sasfin, previously with Liberty/Stanlib and Absa.
I have interviewed Shear at all these companies quite regularly over the years. He is one of the best choices for investors looking for a safety first, conservative approach to investment, even before the Allan Gray Stable Fund brought the sector into vogue in 2000.
Shear told Forbes he got his interest in asset management when his family would listen to the radio to hear the stock market report on holiday at the beach. He then went to Liberty, where he was trained by Roy McAlpine, the leading fund manager of the 1970s and 1980s. He makes the point that fund managers need to filter out the “noise” of day-to-day news and focus on long-term trends.
The best fund managers I know don’t get stressed out by the pressures of living up to quarterly performance. Good asset management like McAlpine and Ninety One’s Hendrik du Toit would not dismiss a fund manager for a bad year, let alone a quarter.
The trick is for fund managers to prove to clients and intermediaries such as asset consultants that fund managers aren’t sitting on their hands. Sometimes managers miss the long-term trends — for example by sticking to bricks-and-mortar investments and ignoring technology. But there will always be a place for these so-called value managers, for the very patient.
Shear says the role of the fund manager is actually quite mundane. It’s a world away from George Soros breaking the Bank of England. It is to generate returns for clients over time to allow them to retire with dignity.
In Shear’s unit trust career (if you switched into his funds whenever he moved) you would have ended up with inflation plus four percentage points, ahead of peers in the low equity category by up to three percentage points.
Shear’s somewhat timid personality has helped as he has steered clear of periodic investment fiascos. I would be staggered if Shear piled money into overhyped areas such as bitcoin and weight loss drugs.
Mohamed was one of the first black fund managers that emerged in the 1990s, along with Adam Ebrahim at Allan Gray (he later founded Oasis), Imtiaz Ahmed at Fedsure (later at Stanlib) and Shams Pather at Southern Life.
But then Metropolitan — which was in effect Sanlam’s funeral policy business — decided it was a good time to bring some diversity into the investment team. Aeon Investment Management is now one of the largest organically formed black empowerment firms, as opposed to those that have co-opted black shareholders to tick the boxes.
Mohamed has walked the talk of integrating environmental, social & governance (ESG) factors into his investment approach, even now that ESG seems a bit woke and old-fashioned. Aeon has won quite a few ESG and “straight” asset management awards over the years.
Mohamed says a defining moment in his career was at Metropolitan, when he was accidentally sent an email from group CEO Peter Doyle to Philip Morrell, who then ran asset management, asking when Morrell planned to dismiss Asief. This was the catalyst for Mohamed to set up his own firm, which he did in December 2005.
It wasn’t easy to grow the business, in spite of his good investment track record. It took 10 years to grow to R2bn — he would have had a much more comfortable lifestyle as a corporate employee. But over the next 10 years it has grown to R24bn, easily sufficient funds to do well given the low overheads and capital requirements of boutique investment management.
Mohamed worked in London from 1989 to 1991, which he says gave him enough international experience to think strategically and creatively, from a fresh perspective. In terms of investment decisions, he says he was glad he sold more than a third of Metropolitan’s chunky holding in Dimension Data close to the top at the turn of the millennium — with hindsight maybe he would have sold even more than that.
But he also wisely kept out of Steinhoff, not only because it looked overpriced but because it failed to meet Aeon’s governance criteria. When Steinhoff collapsed in 2017, Aeon’s relative performance soared.
Ninety One CEO Hendrik du Toit describes Natalie Phillips as his secret weapon. She runs the institutional client service team, which has to persuade clients to stay on board during periods of underperformance. Ninety One is a far more complex animal than Sasfin or Aeon. Phillips calls it (rightly) the only truly globally integrated firm in SA.
She says the firm allows its staff to be masters of their own destiny, even allowing them to change roles and work within different parts of the business.
“Listening to clients, building solutions to meet their specific needs and seeing the results in their support of these investment strategies has given me great satisfaction,” she told Forbes.
• Cranston, a former associate editor of the Financial Mail, is author of the recently published book on SA fund management ‘The Mavericks’.
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