While there has been progress in making asset managers more racially inclusive, current empowerment policies are not effectively increasing the number of women in leadership positions, says Fatima Vawda, CEO of investment firm 27four.
The company has released a diversity, equity, and inclusion (DEI) index after surveying 93 asset managers in South Africa, assessing them for representation, leadership and governance against global trends.
“I feel that the BBBEE codes are a bit outdated. The financial sector codes are based on the BBBEE codes and are therefore also outdated. They have stayed in one place whereas the rest of the economy and political space shifted from that point.
“I think they were designed for a particular time in history and to achieve certain objectives. But they needed to be continuously updated to deal with the economy and transformation, which [hasn't been] done. It’s a nice big job for trade, industry and competition minister Parks Tau.”
The index found that while blacks are represented in senior leadership roles, with 66% of CEOs being black and 63% of board chairs also black, women were significantly underrepresented, making up just 18% of CEOs and 16% of CIOs.
It also found that women tend to occupy more entry-level positions, such as analysts, and face barriers to progressing to senior decision-making roles like portfolio managers, where 76% of firms report that women represent less than 30%.
A diverse set of cognitive biases brings advantages. We don’t want 100% black teams. We don’t want 100% women teams. We want 100% diverse teams from different schools and streams of thought because each one brings something different to the table.
— Fatima Vawda, CEO of 27four
However, 94% of firms reported having attained gender pay equality, outperforming the global trend. The gaps in promotions and retention remain, with 97% of firms promoting black employees at similar rates to white employees and only 87% doing so for women compared to men.
“We can influence how listed companies and corporates in the private space behave. We introduced the concept of being active stewards of capital. If you invest in a firm, you can influence good governance.”
Vawda said asset management teams were subject to high turnover and job-hopping among women analysts, which needed to be addressed alongside issues such as sexual harassment, wage discrepancies and company policies that may discriminate against women.
“A diverse set of cognitive biases brings advantages. We don’t want 100% black teams. We don’t want 100% women teams. We want 100% diverse teams from different schools and streams of thought because each one brings something different to the table.”
She said backlash from consumers and stakeholders to the US federal government’s decision to backtrack from diversity and inclusion commitments following President Donald Trump’s re-election may lead to pressure from consumers, shareholders and advocacy groups, potentially leading to brand damage.
She applauded the large asset management firms in South Africa for their commitment to transformation and enhanced representation. While the index could not make the detailed scores public, each asset manager knew its own score and the averages in each metric.
“There have been some exceptional cases. Old Mutual came out on top in DEI... Each firm knows its score and the averages. The data is all there. The top guys demonstrated strong performance. The sector has taken phenomenal leaps.”
The head of the multi-asset portfolio at Prescient Investment Management, Rupert Hare, said the industry continued to evolve due to increased competition. This is pushing managers to innovate and placing pressure on fees throughout the value chain.
“South Africa is no exception, with the local asset management industry lagging behind global markets in many ways, possibly due to its origins tied to successful active single stock investment strategies.
“As markets have evolved through time, processing of data has become more efficient, more regulated and more scrutinised.”
He said Prescient’s total assets under management at the end of 2024 were R153.4bn across a range of asset classes. To meet growing investor demand in this space, the company plans to expand its domestic balanced strategy to well over R1bn shortly.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.