May 2010
Advantageous Insights is produced by the Research team at
Advantageous Insights
May 2010
Contents
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Absa Balanced Fund Industry Dynamics
Absa Asset Management
In this edition of Advantageous Insights, we focus on Absa Asset Management, in particular, its balanced mandate. For completeness we will also provide insights into the company’s background, the composition of the investment team, the investment philosophy and process, and attribution analysis to determine how well this philosophy is translating into value-add. team members, that were willing, to Johannesburg, where he would consolidate six Absa investment companies under a single co-ordinated management structure. The six Absa companies were: • Absa Asset Management, which is an institutional fund manager wholly owned by the Absa Group. Absa Portfolio Managers, trading as Absa asset management Private Clients. Absa Fund Managers, which has managed Absa’s unit trusts since 1991. Absa Stockbrokers, which has been a member of the JSE since 1959. Absa Mortgage Fund Managers (1988), which manages the Absa Participation Bond Fund. Absa Investment Management Services (AIMS) (1980) which is involved in multi-management, investment advice models and investment administration.
The background Asset Management
on
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Absa
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Absa Asset Management (ABAM) is a specialist institutional investment business. Previously known as Abvest Associates, the group was founded by John Winship (CEO, previous CEO of BOE Asset Management) and Bryan Hopkins (CIO, previous CIO of Old Mutual and founder of Velocity Asset Management) as a joint venture with Absa. Initially the Absa Money Market Fund, one of the largest money market funds in the country, provided the core assets for the new entity. This was Absa’s second foray into the asset management business. Later though, the team attracted an asset management team, which included luminaries such as Sam Houlie (now with Investec), Kimon Boyiatjis (now at Trident Capital), Shawn Stockgit, (now with Stanlib), Rodger Walters (now at Re:CM) and Mohamed-Shafee Loonat (now with Element, formerly known as Fraters).
Effectively, the joint partner model proved to be less than optimal for Absa. Allan Miller, newly arrived from his role as CEO of Stanlib, was appointed managing executive and tasked with the job of bringing the Abvest
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The majority of the Abvest Associates staff chose to remain in Cape Town and seek employment elsewhere in the industry. Only two remained with the newly-formed entity. They were the former Head of Fixed Interest, Leon de Beer and current equity dealer, Masixole Mbulawa. De Beer subsequently left ABAM in 2008 and was replaced by Juan Bekker. This effectively meant that an entirely new investment team was recruited by Miller, mainly from his former employer Stanlib.
Olwethu Mafanya
Research Analyst Advantage Asset Managers
Advantageous Insights – May 2010
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ABAM’s investment team consists of 12 investment personnel. The team is led by CEO Alan Miller and CIO Errol Shear. Alan Miller (CEO); BEcon, BSc (Hons), FIA, ASA, CFA. Miller joined Liberty Life’s actuarial staff in 1990 and in 1997 moved to Liberty Asset Management (LIBAM).
He was appointed CEO of LIBAM in 2000. He was responsible for the merger between SCMB Asset Management and LIBAM. Alan joined Absa in December 2005. Errol Shear (CIO); Bachelor of Business Science (Finance) (Hons), CA (SA), CFA. He started his investment career at Ernst & Young, where he completed his articles. Thereafter, he joined Liberty Asset Management (LIBAM) in 1985, where he assumed responsibility for research into many of the large capitalisation shares on the Johannesburg Stock Exchange and later a wider range of investment portfolios. Shear was an executive director at Stanlib Asset Management and was responsible for managing the Liberty Group and Liberty Active (Charter Life) life fund portfolios, as well as various segregated funds. He joined ABAM in May 2006 as Chief Investment Officer. He has over 24 years investment experience. Greg Kettles (Investment Manager); BCom (Hons), CA (SA), CFA. After completing his articles at Deloitte, Greg continued his profession as a partner in a small practice for a number of years before joining LIBAM (now Stanlib Asset Management) in 1994. He held a number of roles at LIBAM and Stanlib, including derivatives trading and research into numerous sectors of the JSE. Greg was head of financial research for several years and also managed numerous portfolios, both segregated client portfolios and unit trusts. He was also a member of the international team, which managed the offshore assets of Stanlib’s clients on a multi-manager basis and also managed the Stanlib Multi-National Fund (a unit trust investing domestically and directly offshore).
The Business plan on Portfolio Management 2
My sincere thanks to Mr. DEEPAK, Manager and Ms. SWATHI BASA, Assistant Manager for permitting me to pursue this project and for providing their valuable time, suggestions and support for completing my project work successfully. Their patience and invaluable guidance have proved to be very precious without which this project would not be completed. Acknowledgements are also due to all the other ...
He joined ABAM in September 2007 and has 15 years industry experience. Stephen Arthur (Resources Analyst); BSc Eng (Mining), CFA. He worked for several years as an engineer in the mining sector before stints at LIBAM, FTNIB and Absa Capital. He joined ABAM in June 2006. He has over 20 years industry experience. Michael van Andel (Investment Manager); BCom (Acc) (Hons), CA (SA).
Previously with Deloitte, he joined ABAM in May 2007. Sean Grindley-Ferris (Bank Analyst); BCom (Hons), CA (SA).
He has over six years industry experience, three of them with ABAM. He was previously with Price Waterhouse Coopers, where he was a Senior Manager in Banking and Capital Markets.
Lieketseng Pitse (Industrial Consumer Analyst); BCom (Accounting).
Her previous work experience includes stints with BoE, the IDC and Abvest Associates. She has over ten years industry experience. Dale Hutcheson (Industrial Analyst); BCom, Dip (Acc), HDip (Tax), CA (SA).
He previously worked at Credit Suisse First Boston and has over eight years experience. Juan Bekker (Fixed Interest Manager) Juan has over 18 years industry experience. He has previously held positions at STANLIB and Absa. The rest of the team compromises of: • • • • Masixole Mbulawa (Equity Dealer) BCom (Accounts), SAIFM. Rehana Rungasamy (Fixed Interest Dealer) BCom. Amelia Swart (Quantitative Analyst) BSc (Computer Science), MSc (Quantitative Health Science).
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Nolwazi Sokhulu (Assistant Research Analyst in Mining) BBusSci (Hons Finance).
ABAM’s investment and objectives
philosophy
ABAM applies a general value biased investment philosophy in managing funds for its clients. This means it seeks to invest in shares which are trading at a discount to intrinsic value, based on earnings, cash flow or asset values. ABAM follows a bottom-up stock picking approach in selecting the underlying equities held in their portfolios. Top-down analysis is used only as a reasonability check and to ensure diversification. The key tenets of their equity philosophy are: • Focus on quality, low volatility, value type shares. • Low P:E. • High dividend yield. • Low price to cash flow. • Discount to net asset value . The bulk of the portfolios are usually derived from larger capitalisation shares. However, since value is often found amongst the mid- and smaller cap shares, the portfolios usually invest around 20% of the total portfolio to these categories. ABAM’s investment philosophy for equities focuses on the critical inter-relationship between business, management and price. Its concept of an ideal investment is the simultaneous existence of an excellent business, run by excellent management and a market price well below true business value. This further indicates
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Business
Understandable Strong balance sheet Competative advantages Generates free cash flow which will grow Pricing power
Management
Capable operators Capable capital allocators Shareholder orientated Proper incentives
Price
Discount to intrinsic value Present value of future free cash flows Current liquidation value Private market value
Source: Due diligence document
Combining business, management and price provides ABAM’s investment team with the guiding principles for finding undervalued securities. Its approach is essentially bottom-up (at an individual security level) and is valuation focused. This approach is designed to answer the following questions: • Is this a good business? • How does management compare to the average business manager? • What is the business worth? (This gives an idea of what price the share is trading to its intrinsic value.) As a result of this approach, its investment philosophy has a ‘pragmatic value-style bias’. This concept was developed by Benjamin Graham and David Dodd as far back as 1934 and is based on fundamental analysis. ABAM couple this pragmatic value-style bias with a strong preference for quality shares.
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The investment process
The process is designed to facilitate measurement and compliance at every level to recognise the level of contribution made by each analyst and portfolio manager. ABAM have tried to design a process that is robust, scalable, repeatable and not dependent on any one person. Both analysts and portfolio managers are tasked with identifying undervalued stocks. Their commitment to the bottom-up selection process means that the overall process is less based on macro-economic factors, such as the performance of the economy or the direction of interest rates. Such macro-economic factors are, however, incorporated into the assessment value of the individual securities. ABAM’s definition of the investment universe is the top 100 stocks in terms of market capitalisation and approximately 40 companies with market capitalisation below the level of top 100, which meet specified criteria. Its research process results in a price to fair value ranking and a view of all stocks in the investment universe.
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Source: Due diligence document
The result is a collective team effort aimed at identifying the best value opportunities in the market. The price to fair value rankings can be used by each sector head or portfolio manager to construct a focused portfolio, built up stock by stock. In translating ideas into portfolios, Absa Asset Management maintains two distinctive equity portfolio strategies: • In its absolute equity portfolios (best view), the primary objective is to limit the risk of losing money and to outperform a market benchmark over time. In its relative equity portfolio’s (house view), the primary objective is to produce progressive and incremental outperformance of the agreed benchmark, within agreed risk parameters.
The Business plan on Fins Asset
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The process outlined below shows how Absa Asset Management research process devolves into these two distinctively different strategies.
Source: Due diligence document
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Effectively then, the house view or relative equity portfolio should probably be viewed as the more traditional, benchmark relative strategy while the absolute equity (best view) strategy focuses on protecting the downside risk of a long term wealth accumulation and could be deemed a more deep value approach.
The decision is then translated into a positive, neutral or negative score. In essence this score indicates their level of conviction that the view is correct. The score is then translated into a desired duration target. The duration target is then implemented by the selection of securities taking the following into consideration: • Analysis of yield curves. • Analysis of duration and terms to maturity. • Portfolio modelling and valuation. • Credit and risk analysis. • Sector and stock selection.
Under which economic/market scenarios is the ABAM investment process likely to either flourish or falter?
Since ABAM adopts a pragmatic value approach and looks for undervalued assets on an individual asset basis, it will probably do worse when markets move to excessive valuations and do better when markets return to fair value. By their own admission, ABAM tends to be slightly conservative and thus performs relatively better in flat or downward moving markets. ABAM tends to perform least well (from a relative point of view) when momentum is moving the market upwards.
The construction of balanced funds
The balanced fund is managed with key asset classes and sectors (fixed interest, industrials, financials, resources) constituting the building blocks. There is a quarterly formal review of the asset allocation decision. This decision is informed by: • Expected returns per asset class, • Risk per asset class, • Diversification needs, • Strength of conviction and • Execution of the asset allocation decision. The asset allocation process considers economic input and market intelligence gathered from members of the Absa Group such as Absa Capital, brokers and other external sources. ABAM also takes into consideration the view of strategists, brokers, BCA and team knowledge. Aditionally looking at ABAM research of both the macro economic environment and individual company earnings. Once all the economic input data has been gathered from the relevant sources, returns are forecasted for the different asset classes.
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ABAM’s investment process applied to fixed income opportunities
Juan Bekker heads up the fixed interest, with a dedicated fixed interest dealer in Rehana Rungasamy. The whole investment team sits in on the weekly formal reviews. At the heart of ABAM’s fixed income process is a directional view on interest rates. This is in stark contrast to the non-macro directional view of the equity selection process. To arrive at this interest rate view, the team uses a checklist detailing all the factors that they believe influence the direction of interest rates. The checklist is organised into six broad categories with each category being assigned a weight when calculating the overall directional decision. These categories include: • Economic fundamentals. • Monetary conditions. • Valuations. • Liquidity. • Technicals. • International factors.
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Economic Input Absa & other
Forecast returns from asset classes
Asset Allocation Committee Debate expected returns & conviction
Asset Allocation
Source: Due diligence document The asset allocation committee then debates expected returns and conviction, given the data at hand and the forecasted returns from asset classes. They then reach a consensus on the asset allocation decision, which is then reviewed quarterly. The different asset allocation ranges for equities for the different funds and for different risk appetites, assuming Regulation 28 compliance, are: • Managed – 45% to 75%. • Balanced (medium equity) – 40% to 65%. • Absolute Return – 20% to 40%. Currently, there is no allocation to international funds, but ABAM is in the process of launching a Global Balanced mandate.
Attribution of the ABAM Balanced Fund
In analysing the performance of ABAM’s Balanced Fund an attribution analysis was implemented, using data over September 2006 to December 2009. Please note that while this period of analysis covers both bull and bear markets, it is still a particularly short period for analysis. The benchmark used for ABAM’s balanced fund is a composite of the following: • 65% CAPI. • 25% ALBI. • 10% STeFI. There is no international portion to the benchmark, as this fund focused purely on local asset classes.
Graph 1: Total contribution to active return from each asset class
Total attribution effect per asset class
Total
Local equity Local bond Local cash Real estate Other
Global
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Graph 1 shows the total annualised excess return, meaning that the portfolio has added 5.4% excess return per annum above that of the benchmark. The asset class with the biggest contribution was the local equity component, which contributed +3.2% per annum, while local bond added +2.2%. Below these asset class atributions are disaggregated in that element of return that was derived from the timing of their asset allocation decision. Graph 2: Contribution to return from asset allocation
Asset allocation effect per asset class
Total
Local equity Local bond Local cash Real estate Other
Global
Graph 2 indicates that slightly less than half of the performance contribution came from the asset allocation decisions taken relative to the portfolio’s benchmark. These contributed +2.6% per annum over this period. Local bonds were the biggest contributor with +1.7% per annum, followed by the local equity component +0.8%. Local cash was almost flat at +0.1%. Graph 3: 12 months rolling asset allocation contributions
12m Rolling Attribution 7.00% 5.00% 3.00% 1.00% -1.00% -3.00% -5.00%
May-08 May-09 Mar-08 Mar-09 Jul-08 Feb-08 Feb-09 Jan-08 Jun-08 Nov-07 Dec-07 Nov-08 Dec-08 Jan-09 Jun-09 Jul-09 Nov-09 Aug-08 Aug-09 Dec-09 Oct-07 Oct-08 Sep-08 Sep-09 Apr-08 Apr-09 Oct-09
Asset Allocation Contribution
Local Equity
Local Bonds
Local Cash
Real Estate
Other
Global
Graph 3 indicates that the positive contribution, which is evident from asset allocation in Graph 2, has been experienced mainly from April 2008 to September 2009. In fact, the 12 month rolling attribution from asset allocation contribution is only negative in December 2009 over the period reviewed.
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Graph 4: 12 months rolling active weights
Active Weights – 12m rolling
15.00% 10.00% 5.00% 0.0% -5.00% -10.00% -15.00%
Mar-08 May-08 Mar-09 May-09 Feb-08 Feb-09 Jan-08 Jun-08 Jan-09 Nov-07 Dec-07 Nov-08 Dec-08 Jun-09 Nov-09 Aug-08 Aug-09 Dec-09 Oct-07 Oct-08 Sep-08 Sep-09 Apr-08 Apr-09 Oct-09 Jul-08 Jul-09
Local Equity
Local Bonds
Local Cash
Real Estate
Global
Other
Graph 4 indicates the average annual active weights of the ABAM Balanced Fund over the period under analysis on a 12 month rolling basis. Local equities were initially overweight relative to the benchmark from October 2007 to August 2008. Thereafter, they have been at a consistent underweight relative to the benchmark, though this position has been reduced significantly over the past three months to December 2010. The fund has taken large positions on local bonds, being significantly underweight from October 2007 to January 2009. The fund has since taken an extremely large overweight position in bonds. Local cash was initially overweight relative to the benchmark, but has been underweight since April 2009. Graph 5 highlights good stock selection within local equities, also contributing to performance. Graph 5: Contributions to return from security selection
Security selections effect per asset class
Total
Local equity Local bond Local cash Real estate Other
Global
Graph 5 indicates that the security selection relative to the benchmark added a total of +3.0% per annum. A contribution of +2.4% per annum of this was due to local equity, with +0.5% per annum attributable to local bonds and +0.1% per annum to local cash. This is further confirmed by Graph 6.
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Graph 6: Total contribution from security selection
12m Rolling Attribution
10.00% 8.00% 6.00% 4.00% 2.00% 0.0% -2.00% -4.00%
Mar-08 May-08 Mar-09 May-09 Jan-08 Jun-08 Jan-09 Feb-08 Feb-09 Jun-09 Jul-08 Nov-07 Dec-07 Nov-08 Dec-08 Jul-09 Nov-09 Aug-08 Aug-09 Dec-09 Oct-07 Oct-08 Sep-08 Sep-09 Apr-08 Apr-09 Oct-09
Security Selection Contribution
Local Equity
Local Bonds
Local Cash
Real Estate
Other
Global
Graph 7: Total contribution to active return
12m Rolling Attribution 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.0% -5.00% -10.00%
Jan-09
Jan-08
Jun-08
Jun-09
Oct-07
Oct-08
May-08
May-09
Mar-08
Feb-08
Mar-09
Feb-09
Oct-09
Jul-08
Jul-09
Nov-09
Nov-08
Nov-07
Dec-07
Dec-08
Sep-08
Aug-08
Actual Active Return
Total Asset Allocation
Total Stock Selection
Aug-09
Trading
Graph 7 shows the 12 month rolling attribution of total contribution to active return. While actual active return was positive for most periods, it is observable that total asset allocation and total stock selection were the main contributors to actual active return over time. Trading was the biggest detractor to total contribution to active return over time. Graph 7 highlights that, although the time frame for analysis is short, the results are impressive when compared against other managers over the same period of time. ABAM also showed consistency in grinding out active return.
Graph 8 shows a comparison of the cumulative returns of the Absa Balanced Absolute (best view) and Absa Balanced Relative Funds (house view) from 30 November 2000 to the end of January 2010. The relative fund pulled ahead during the bull market which could be expected given the philosophy, but the absolute failed to catch up during the market correction. It should be kept in mind that the performance track record of the firm is far longer than that of the current team and process, and only more recent data is relevant for analysis.
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Dec-09
Sep-09
Apr-08
Apr-09
Advantageous Insights – May 2010
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Graph 8
ABSA Balanced Absolute vs ABSA Balanced Relative: Cumulative Monthly Returns
250
200
150
100
3 4 8 00 01 05 00 2 06 20 0 00 7 05 ar 20 0 20 0 Ju l2 Ju l2 ay No v Se p No v Se p Ja n M ay M 30 30 30 30 M 30 30 30 30 30 30 30 M ar 20 0 20 20 20 20 20 9
ABSA Balanced Absolute
ABSA Balanced Relative
The conclusion on ABAM and the balanced fund
The analysis conducted on the ABAM balanced fund showed that the fund has a solid philosophy and process, particularly in (absolute) equity selection. The value space is currently over researched by South African investment managers but ABAM may have a competitive edge in that the analysts and portfolio managers have a lot of experience and there are few size constraints at their current level of assets; with little peer group focus. It’s asset allocation process is fairly well defined and not key man dependent, but there is no obvious competitive advantage in this approach, or within fixed interest. The team has been steady since 2006 and contains a good deal of experience. This team has received little media coverage, but a quick glance at the Alexander Forbes Manager Watch shows solid performances over the recent past. We regard ABAM as a solid investment house, with an experienced equity team, small assets, low peer-group focus and a good track record in the balanced space, which should begin to initiate consultant and client interest. Olwethu Mafanya Junior Portfolio Manager
Olwethu Mafanya Junior Portfolio Manager
Advantageous Insights – May 2010
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Advantageous Insights – Industry Dynamics
May 2010
Advantage Asset Managers
Leon Greyling Leon was appointed as the new Chief Executive Officer of Advantage Asset Managers. He replaces Vimal Chagan the outgoing CEO, as Vimal has accepted an opportunity within the FirstRand Group to work in India. Leon has extensive experience in the asset management and retirement fund landscape. He headed Alexander Forbes Asset Consultants in late 1990 and following that, was a Director of Investment Solutions and, a member of its executive and investment committees. He left Investment Solutions in 2008, after serving 13½ years with the Alexander Forbes group. His most recent role has been as the Deputy CEO of Sygnia Asset Management, where he started up the Johannesburg office. In addition the following appointments and changes took place within the Investment Management Unit of Advantage Asset Managers: Neelan Pillay; MBA Neelan Pillay was promoted to the position of Chief Operating Officer (COO) of Advantage Asset Managers during March 2010. He was previously the Head of IT and Project Delivery. He has 10 years’ experience within the Financial Services industry – three years in project consulting to financial services companies and organisations with the remaining seven years spent at a large commercial bank in various roles and capacities ranging from project manager, business analyst, test analyst, product manager and project accountant. Project experience relates to medium and large scale, multi-million rand projects involving solution development, automation and business process re-engineering. Neelan holds an MBA degree from the University of the Witwatersrand. Jako de Jager; BCom (Hons) Jako de Jager has been promoted to the position of Head: Portfolio Management. He is well known to most and has been employed as a senior portfolio manager within the Advantage Asset Managers Investment Management Unit for the past four years. He has nine years of investment industry experience. Jako’s responsibilities included portfolio management, product development as well as manager research. As a senior member of the investment team he is also responsible for managing key client relationships with some of Advantage’s major clients. Apart from managing one of Advantage’s flagship portfolio ranges, Jako also has the responsibility for overseeing the international investment offering and has been instrumental in developing and implementing new offshore strategies. Jako has a BCom (Hons) in Investment Management obtained from the University of Johannesburg. Wynford Heynes; MSc Wynford Heynes has been appointed as the Managing Director of the Advantage Collective Investment Scheme Management Company and as Head: Product Development and Implementation. Wynford completed his studies at the University of Cape Town which culminated in him graduating with an MSc degree (awarded with distinction) in Operations Research in 1995. He has more than 14 years experience in the broader investment area and has worked for Cape of Good Hope Bank, Absa Asset Management, Liberty Asset Management, Standard Bank, and Morgan West; a derivative structuring house where he was an executive with primary responsibility for quantitative research and analysis as well as risk management and execution. He joined Investment Solutions in June 2006 as Head: Product Development, Competitor Research and Structured Solutions and was also appointed to manage the fully vesting guaranteed portfolios of the company within the first year of joining. In January 2008 Wynford was promoted to Managing Director of the Investment Solutions Unit Trust Manco and head of their retail business – he also started serving on the Executive Committee of the company. In addition to his existing portfolio, he assumed overall responsibility for the local and offshore (Jersey based) Collective Investment Scheme businesses of the company and was also tasked with further developing a strategic retail business plan for Investment Solutions.
Brendan Howie; BSc (Hons), CFA, CIPM Certificate of Finance and Investment (Institute of Actuaries, UK) Brendan Howie has been appointed as Head: Research. After completing a BSc Hons in mathematics at Wits, Brendan joined the Investment Solutions investment team in 1999. While completing the CFA and CIPM programs, he worked in manager research and portfolio management before being made Head of Quants. He then joined the Large Funds team which he eventually headed, his responsibilities included looking after Investment Solutions’ 50 largest clients. Brendan then took up a position as Head of Technical – responsible for all technical issues (benchmarks, strategic asset allocation, product design and fees) across the business. After passing his Fellowship exam in September, he is back on track to completing his actuarial exams. He is also busy with a BCom with a view to postgraduate studies in economics.
Coronation
Stephen Peirce; BA (Economics), MA (Finance), UKSIP The fixed interest team has been bolstered with the appointment of Stephen Peirce. Stephen brings a wealth of international experience. He began his career in 1994 with Teachers Provident Society, a UK life assurance company. He then joined Société Générale Asset Management in 2000 before moving to Royal London Asset Management in 2005. Stephen has managed a wide range of institutional and retail fixed income products in the UK. Coronation has also recently launched both a Global Bond and Global Cash Portfolio, managed by the fixed interest team in Cape Town. Stephen will form part of the fixed interest team managing both foreign and domestic portfolios. Christine Fourie Keneilwe Moloko resigned from the fixed interest team in November 2009 due to personal reasons. Her credit research responsibilities will now be covered by Christine Fourie. Christine is a qualified actuary and has substantial asset management experience.
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Advantageous Insights – May 2010 12
Dibanisa
On the back of its SA team now managing international products as well, Dibanisa announced the following appointments in January 2010: • Duncan Smith – Head of International Operations (B Com, 18 years investment services experience) • Jackie Timothy – Business Analyst (B Com, 8 years investment services experience) • Frank Sibiya – Investment Analyst (B Sc Mathematics) • Ernest Nene – Investment Analyst (B Com) Duncan Smith; BCom Duncan Smith was previously Head of Issuer and Asset Servicing at Strate Central Securities Depository. Prior to this he was Head of Absa Capital Investor Services at Absa Capital. Duncan was at m Cubed Holdings before this time. He has experience in exchange traded funds, American depository receipts, contracts for different custodial services, fund accounting, securities lending, and equity and agricultural derivatives clearing. In addition to these new appointments they have also restructured the Dibanisa fund management (DFM) team. This has been based on two recent developments. Firstly, Loftie Botha’s decision to relocate to Cape Town therefore resigning from his position as Chief Investment Officer. Secondly, given that DFM is now playing a pivotal investment services role across both the local and international funds, Craig Chambers has decided to take a more hands on role in the tracker management of all the Dibanisa funds. As Managing Director of the local business, Craig Chambers will continue to be responsible for the overall running of the local business, reporting directly to its global CEO, Tendai Musikavanhu. To assist Craig Chambers in the management of the funds, Dibanisa has promoted Anver Dollie to Deputy Chief Investment Officer and Kingsley Williams to Head of Research. Eldria Fraser Eldria has been appointed Chief Executive Officer (CEO) of Prescient Investment Management and is responsible for managing the business, including continued quality service to its client base. Guy Toms Guy is Chief Investment Officer (CIO) and is responsible for the overall investment strategy of Prescient’s product solutions. Ronell van Rooyen Ronell has been promoted to Head of Portfolio Management and will be responsible for managing the investment team. Pedro Samuel Pedro, who heads up Prescient’s office in Gauteng and is Head of Institutional Sales, has been appointed a Director of Prescient Investment Management.
Prowess Investment Managers
Stella Ndaba Stella has joined Prowess Investment Managers as Head:Business Development and Executive Director. She joins Kelebogile Moloko the current Chief Executive Officer/ Portfolio Manager. Stella’s role at Prowess will include formulating the business development strategies, managing client relationships, as well as branding and marketing. Stella has a Certificate in Principles of Public Relations, a diploma in Office Administration, a MDP Certificate through the University of Stellenbosch Business School and 14 years experience in the financial services sector. She previously worked for Sanlam Collective Investments and later joined Trilinear for five years.
OMIGSA
Thabo Dloti from Group South Africa (OMIGSA), had decided to leave Old Mutual to join the Liberty Group as CEO. Tim Cumming Tim, who was currently the Old Mutual Group Strategy Executive and a former head of Old Mutual’s asset management business, assumed the role of acting CEO at OMIGSA. The rigorous process of selecting and appointing a new OMIGSA CEO would be conducted jointly by Dr. Len Konar, the Chairman of the OMIGSA board of directors, and Kuseni Dlamini.
Prudential
Graham Mason During December 2009 Graham announced that he had accepted an offer to move within the Prudential Group to take up the position of Chief Executive Fund Management with Prudential Corporation Asia (PCA), joining the Board of PCA. Graham would be relinquishing his role as Chief Executive of Prudential in South Africa. Bernard Fick It was announced that Bernard, current Head of Institutional Business, has been appointed as Chief Executive of Prudential Portfolio Managers South Africa. Valdon Theron Valdon, who recently joined Prudential from Investec Asset Management, has been promoted to Head of Institutional Business. Marc Beckenstrater On the investment team Marc, currently Head of Equities and co-head of Investments, will assume the role of Chief Investment Officer.
Prescient
During February, Prescient realigned the structure of its business strategy and processes by making the following strategic appointments: Carey Millerd Carey, previous CEO of Prescient Investment Management has been appointed Vice Chairman of Prescient Holdings, to take on the responsibility for driving the growth opportunities for Prescient Life, Prescient Management Company and Prescient’s retail and international strategy.
Contact details Tel +27 86 153 8732 e-mail [email protected] Website www.advantage.am
Advantageous Insights – May 2010 13
Gary Quinn Gary becomes Head of Equities. In addition to taking responsibility for their balanced fund portfolios, Marc will also join the asset allocation committee, which will in future be headed by David Knee. David retains his responsibilities as Head of Fixed Income. The third member of the asset allocation team is Michael Moyle, who is also Head of Real Return Portfolios. Prudential also made two recent, senior appointments to their management team: • • Kerry Horsley has been appointed as Head of Compliance, previously from OMIGSA. Debbie Rossouw has been appointed as Head of Marketing, previously from Zurich Insurance in South Africa.
On joining RMB Asset Management, Thiru-Nesagan, was a member of the Consumer Industrial team, but assumed non-consumer research responsibilities as well. In January 2007 he was promoted to senior analyst for the life assurance sector in addition to his current research and fund management responsibilities. He currently has research responsibilities for all the shares in the financial sector in addition to the managing of the RMB Financial Services Fund. At University Natal Durban, he was awarded the University Honours Scholarship, Accenture class medal and was on the Dean’s Merit List – 1999, 2000 and 2001.
Sanlam
Andre Roux Andre, who was the head of Fixed Interest has now been appointed as Chief Investment Officer for SIM Namibia. Sanlam’s Fixed Interest area will now he headed up jointly by Chris Hamman and Gerhard Cruywagen, the current Chief Investment Officer. However, Andre will still remain part of SIM’s investment team with specific responsibility for SIM’s Inflation Linked portfolios and report directly to the Chief Investment Officer. Chris Hamman Chris Hamman, who is currently responsible for the institutional fixed interest and annuity portfolios, has 11 years experience in fixed interest. Gerhard Cruywagen Gerhard, who joined SIM in 2008 as the Chief Investment Officer has substantial experience in managing fixed interest assets. Prior to joining Sanlam, he was the Chief Investment Officer at Prudential, as well as, the Head of Fixed Interest. In addition Michael Viljoen and Johan Verwey are joining SIM’s credit team from Sanlam Capital Markets (SCM).
Michael and Johan were previously responsible for managing SCM’s credit conduit, a R4bn credit investment vehicle made up of both listed and unlisted credit investments. Johan Verwey; MSc (Applied Mathematics), CFA Johan has worked in the financial services industry since 1997 when he joined the then Gensec, or Genbel Securities, as a quantitative analyst. He was instrumental in implementing a quantitative credit measurement system in Gensec Bank and Sanlam Capital Markets in 2002. Since 2006, Johan has been part of the implementation and management team responsible for the Sanlam Credit Conduit. Michael Viljoen; MEcon Michael started his career in the financial services industry in 1996 as an economist at Absa after completing a MEcon. He also worked as a country risk analyst in the UK before returning to SA in 1999 and joining Standard Corporate and Merchant Bank as a credit risk analyst. He became a senior credit risk analyst at Sanlam Capital Markets in 2003 and a credit portfolio manager in 2008.
Re:CM
Piet Viljoen, Executive Chairman of Re:CM, announced some changes in senior responsibilities during January 2010. Rodger Walters Rodger has decided to step down as a portfolio manager and focus his attention on investment analysis. Wilhelm Hertzog Wilhelm has been appointed as portfolio manager, in addition to his analytic responsibilities. He will now become a part of the portfolio management process, where he will have joint responsibility for managing their regulated funds, along with Daniel Malan and Piet Viljoen. Lonn Potgieter In addition, Lonn has been appointed as the Managing Director of Re:CM. He joined Re:CM two years ago. Daniel Malan Lastly, Daniel has been promoted to the Chief Investment Officer role of Re:CM. Piet Viljoen Piet will spend more time on the high level strategic direction of the firm, as well as on analysis and portfolio management duties going forward.
RMB
Andrew Vintcent Andrew, the Head of Financials, resigned and elected to join Stanlib as Head of Research. He has now been replaced by Thiru-Nesagan Chetty as the new Head of Financials. Thiru-Nesagan Chetty; BCom (Hons) Cum Laude, CFA Thiru-Nesagan has eight years industry experience, which he has gained at RMB Asset Management. He joined RMB Asset Management’s fledgling investment excellence training programme in 2002 after completing his Finance Honours degree.
Contact details Tel +27 86 153 8732 e-mail [email protected] Website
Advantageous Insights – May 2010 14
Stanlib
Stewart Rider Following on from Liberty Holdings’ recent appointment of Thabo Dloti as CEO of Stanlib, the company confirmed Stewart Rider as its Chief Investment Officer during February 2010. The appointment was effective immediately, with Rider having successfully filled the position in an acting capacity since September 2009. In addition to his proven executive management skills, he brings with him broad based investment experience, having been a top rated insurance analyst during his tenure at Merrill Lynch between 1998 and 2004. Rider has already strengthened Stanlib‘s investment team with some senior portfolio management appointments: • Andrew Vintcent has been appointed as Head of Research. • Kate Rushton has been appointed as Head of Fixed Income Credit process. • Shawn Stockigt has been appointed as Small and Mid Caps Fund manager respectively. • Herman van Velze as a balanced fund manager during 2009. Andrew Vintcent Andrew joins Stanlib from RMB Asset Management where he was a Portfolio Manager and headed the financial team. He joined RMB in 1999 where he filled a variety of roles including Banking Analyst and Head of Financial Research. Apart from his responsibilities as Head of Research, Vintcent will also manage Stanlib’s Prosperity Unit Trust Fund. Andrew replaces Nigel Mckenzie who will leave Stanlib at the end of March to pursue alternative career opportunities. Kate Rushton Prior to joining Stanlib, Kate was the Principal Corporate and Credit Analyst at Absa Capital. A multi-award winning analyst, Kate has extensive experience in financial analysis in various roles including working at London based UBS Warburg’s Investment Banking Division and more recently as a Corporate and Credit Analyst at Standard Corporate and Investment Bank (SCMB).
She will head up the credit process at Stanlib, with credit having become a key component of most fixed interest portfolios. Shawn Stockigt Shawn joins Stanlib with over 14 years experience in the asset management industry having held positions as portfolio manager with Sanlam, Gryphon Asset Management, Abvest Asset Management and Achelon Capital, with particular focus on the small and mid capitalisation stocks.
Jean Badenhorst Head of Manager Research
Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, Advantage Asset Managers does not accept any responsibility for any claim, damages, loss or expense, howsoever arising, out of or in connection with the information in this document, whether by a client, investor or intermediary. The contents of this document are confidential and remain the property of Advantage Asset Managers, and may not be reproduced without written permission. Advantage Asset Managers (Pty) Ltd Registration Number 2004/023064/07 Authorised as a financial services provider (FSP) under the Financial Advisory and Intermediary Services Act, 2002 number 19840 Registered as an administrator in terms of Sec 13B of the Pension Funds Act, number 24/401
Jean Badenhorst Head of Manager Research
Advantageous Insights – May 2010
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