Vunani Fund Managers - Life in the old dog
Vunani Fund Managers (VFM) is one of the new names among the black-owned asset managers. But it includes some of the oldest hands in the business, with the three most senior fund managers having more than 25 years’ experience each
Vunani Fund Managers (VFM) is one of the new names among the black-owned asset managers. But it includes some of the oldest hands in the business, with the three most senior fund managers having more than 25 years’ experience each. They are: chief investment officer Guy Fletcher; Tony Bell, who runs the multiple asset funds; and Rowan Williams- Short, who recently joined from its defunct associate company, Orthogonal, to run bond funds.
Romeo Makhubela surprised many when he gave up the prospect of being one of the top executives in the R300bn Momentum Investments — the merger of Metropolitan and RMB’s asset managers — to take a job as CEO of a small, possibly even subscale, manager which runs just R11bn. But Makhubela says he did not come across such experienced, heavyweight fund managers at any of his previous employers.
From its days as Peregrine Quant, VFM has some track records dating back to 2003, most of which have delivered the goods. The Inflation Plus 3% fund has given a 12,1% return compared with 8,4% for the benchmark, while the Active Alsi product produced 27% against a benchmark of 20,4%.
But it has been a poor asset gatherer, with only R11bn in the kitty. Prescient, which has a similar background as a quantitative asset manager, has gathered assets of R90bn. And Kagiso Asset Management, which started life as the index tracking arm of Coronation, now has R32bn under management.
Peregrine CEO Jan van Niekerk says when they had an offer to sell control to Vunani, which was already a minority shareholder, it was a good chance for the business to reinvent itself.
“The Peregrine model is to invest in a range of financial services businesses knowing that some will be more successful than others. We thought there would be a demand for index funds and that SA would follow international trends [index funds account for more than 30% of US equity assets] but index funds, even including Satrix, still have a tiny share of the SA market.”
The best-known fund managers at Vunani are white, but the business is changing. Joe Kainja, previously at Prudential, runs the single asset funds.
Fernando Durrell, a maths PhD, is also a portfolio manager. The market has shown interest in its property portfolios and it has gathered R500m into the asset class, mainly in the Vunani Property Income Fund, which aims to replicate returns in the total property market, and not just listed property (see Money & Investing August 19 ).
Property is an area in which Vunani is already changing its approach from a mathematical, quantitative approach to one in which it uses more fundamental techniques, known as “kicking the tyres”.
Makhubela says that over the next couple of years he would like to bring in at least three experienced fundamental analysts to cover the main sectors of financials, resources and industrials. “There is already a lot of judgment in our asset allocation process so we have moved away from a pure quants approach.”
The old Peregrine Quant was not known for aggressive marketing, but it is now determined to capitalise on its status as a black-owned manager. A year ago Azola Zuma, one of the Vunani inner circle, was appointed as head of business development. Being based at Vunani’s head office in Sandton, she has been able to interact more easily with Vunani’s potential clients than her colleagues in Cape Town ever could.
There were two wins from institutions in June and July, with mandates from the Nampak and Masakhane (platinum miners) provident funds.
The big prize would be the Public Investment Corp (PIC), which has awarded at least R1bn of assets to qualifying black managers.
Makhubela says he will divide his time between Cape Town and Johannesburg.