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Stanlib to close some equity funds

Africa Global Funds
Sept. 6, 2017, 10:30 p.m.
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Stanlib, a South African fund manager with R593bn AUM, is planning to close down a number of equity funds to boost returns as part of a restructuring, Bloomberg has reported.

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Stanlib, a South African fund manager with R593bn AUM, is planning to close down a number of equity funds to boost returns as part of a restructuring, Bloomberg has reported.

“We’re going to rationalize the product suite and are assessing which equity funds still have demand and relevance,” said Herman van Velze, Stanlib’s Head of Equities.

He said that some funds will close early 2018 and the range of mandates will be narrowed without any job losses.

The fund closures follow an organizational revamp that started at the end of last year, which split the investment team into three franchises, consisting of absolute returns, equities and multi-assets. It also changed incentive structures to resemble those of boutique firms, which typically pay managers based on returns rather than just fees. 

The adjustments have resulted in an improved performance over the past three months, according to van Velze.

David Munro, Liberty CEO, said his team is working with the leadership of Stanlib to try and improve the performance of equity portfolio managers at South Africa’s sixth-largest money manager.

Liberty said in August that Stanlib’s South African earnings dropped 54% to R115m in the first half as margins came under pressure, mainly because of weaker investment markets. 

The unit also took write downs related to the termination of an administration program it had outsourced and the start of new franchise businesses.

One of its flagships, the Stanlib SA Equity Fund is ranked 155th out of 164 funds over 1 year and 54th out of 60 over a decade. 

The R1.9bn fund, managed by van Velze, Theo Botha and Ndina Rabali, declined an annualized 3.4% over the 12 months to July, compared with the 4.7% increase in its benchmark, the FTSE/JSE Africa Shareholders Weighted All Share Index.

Stanlib is betting on media and technology company Naspers to improve returns that have consistently underperformed peers and benchmarks. 

The FTSE/JSE Africa All Share Index has climbed 10% this year, driven by Naspers, which has surged 43%. 

The company’s $132bn stake in Chinese media company Tencent Holdings has helped the stock price increase six-fold over the past five years. 

Naspers makes up 10% of the Stanlib Multi-Manager All Stars Equity Fund of Funds, the only portfolio to have beaten its benchmark consistently.

“We were very underweight on Naspers, but it’s now 20% of the South African equity fund,” van Velze said. 

“We think Stanlib can pick up on the market’s momentum and is reasonably well positioned,” he said. 

 

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