Winning investors in a trust business

The unit trust industry gains up to R80-billion every year and fund managers that are transparent are more likely to attract the lion’s share of this offering. This is according to Pieter Koekemoer, head of personal investments at Coronation Fund Managers, who believes that transparency in the financial market is vital as the sector is up against a healthy dose of cynicism.

Koekemoer’s and his team’s efforts received a vote of confidence at the Personal Finance Independent Newspapers Raging Bull Awards held in Cape Town on January 26.
This annual award has for the last 16 years recognised top local and global fund managers operating in South Africa.

Coronation walked off with the following awards: Best Domestic Equity Industrial Fund, Best Offshore Global Equity Fund on a Straight Performance Basis and the Best Domestic General Equity Fund on a Risk-Adjusted Basis. It was also named the third best Domestic Management Company of the Year for 2011.

Koekemoer said that Coronation was “glad for the recognition in general”. “What was especially rewarding was that our global emerging marketing fund won the best offshore investment fund. It is the first year that the fund is eligible for the award. It’s a new fund,” he said. “We find it heartening that we are competing against global fund managers in SA and we won.”

While Koekemoer welcomed these awards, he warned that those who want to invest their cash with a fund manager should “be careful” and look at beyond prizes that managers take home. “Investors should be careful not to place their investments based purely on awards. It does give you an indication of where managers have performed better than their peers, but [you] need a more considered approach rather than just picking the fund that has performed well over a certain time period,” he said.

“An award is one piece of the puzzle. It’s very time-specific and it gets complicated. It does tell you a little bit about a fund manager and their abilities. If you see a manager gets awards over a number of years for a sector, that tells you something about the ability of that team. They must be competent. But it’s definitely not the only factor to consider.”

Koekemoer said that “investment is a trust business”. “In this business, you have to maintain the trust of your clients. You need credibility,” he said. “Investors need to look for stability and consistency. They need to look for managers that perform consistently well over time. Any time shorter than three years is not meaningful. Longer than that is better.” “You should look for a five-year track record. Stability is also essential. Are the factors that gave rise to that performance still in place? Did the manager change dramatically? You want managers to do the same thing over and over again.”

Koekemoer said that there was “not a long list” of stable investment fund manager options in SA. He said that Coronation is the country’s second biggest manager of long-term funds in the unit trust industry. Locally, it is one of the five largest unit trust managers and it specialises in multi-asset funds. Coronation was established in 1993 and currently manages assets worth R270-billion. This includes R70-billion in unit trusts.

Koekemoer said that this was a major undertaking as they were “asking clients to trust us”. “We’re in a world where people are more cynical about the financial services industry in general. Yet people still have the same requirements. Everybody still needs to save. People will invest with transparent fund managers. Money tends to move more to companies that appear trustworthy,” said Koekemoer. “You have money moving from less regulated to more regulated and transparent managers. The unit trust industry gains up to R80-billion each year and it is growing very strongly in South Africa.”

Koekemoer said that there were still countless potential investors who are yet to start saving. He said that many among them quite simply don’t know where to start saving. “It’s a massive challenge to get the message out to people. We try to make as much information [as possible] available electronically. I’m not sure that all the people [who] can benefit have the access because of not having an internet connection or not knowing what questions to ask,” he said.

For more information about Coronation Fund Managers log onto the website

This article originally appeared in the Mail & Guardian newspaper as an advertorial

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