Black asset managers worth investing with
The investment industry may be ignoring black asset managers, but it doesn't mean you should, because many black asset managers now have good track records spanning periods long enough to be meaningful for investors.
A recent survey by 27four Investment Managers, a black multi-manager, into transformation in the asset management industry, found that black asset management firms still manage only 6% of all the savings and investments in South Africa.
When investments managed by the private sector - that is excluding government funds that are managed in-house - are considered, black managers are managing just less than 10% of the R5-trillion, or R490bn, 27four's BEE.conomics survey found.
When it comes to the money that is invested in unit trust funds, less than 1% of funds managed by the unit trust industry in South Africa are managed by black-owned asset managers, 27four's BEE.conomics survey found.
A lot of this money is invested by retirement funds and other big investors, who are advised by asset consultants, but as an individual investor you can choose to support a black asset manager with your own investments.
Fatima Vawda, founder and managing director of 27four, says there are a number of very strong black asset managers who deliver above-average performance over short and longer periods, but who may not have the resources to market their investments aggressively.
The BEE.conomics survey aims to highlight themanagers. For Sowetan, Vawda identified the top performing funds managed by black asset managers in four important types of unit trusts.
If you want exposure to shares only, general equity funds give you diversification across shares listed on the JSE. Among the leading general equity funds managed by black asset managers are two funds from managers known for their ability to pick top shares, the Mazi Prime Equity Fund and the Mergence Equity Prescient Fund.
27four offers a multi-managed Shariáh equity fund - this means it chooses the best manager to manage shares which comply with Shariáh principles.
The Aluwani Top 25 selects 25 shares from the 50 largest shares on the JSE and Aeon offers a Smart Multi-Factor Equity fund - a fund that uses rules-based investing to generate returns from shares.
These funds have returned between 10.56% and 8.88% a year over the past five years to the end of August, which is above the average annual return of 8.08% for general equity funds over this period.
Returns from equity funds can be volatile over shorter periods, and if you want smoother investment returns, your best bet is to invest in a multi-asset or balanced unit trust fund that is diversified across the asset classes of shares, bonds, listed property and cash.
You can choose from three kinds of multi-asset funds - those that can invest up to 75% of the fund in equities (high equity), those that invest no more than 65% in equities at any time (medium equity) and those that invest no more than 40% in equities.
If you are investing for the long term, you should invest in a high equity multi-asset fund as your returns are likely to be highest. Kagiso, 27four and Element are three black-owned asset managers with five high equity multi-asset funds. They have achieved returns of 8.71% and 7.09% a year over the past five years.