BUSINESS NEWS - Glacier by Sanlam has released an analysis of the South African asset management industry that has uncovered some fascinating statistics about investment teams and how they operate.
The survey covered 146 funds across the South African multi-asset low-equity, medium-equity, high-equity, flexible, and general-equity categories.
The findings should certainly give asset managers themselves as well as investors and financial advis0rs something to think about:
Almost half of all fund managers obtained their undergraduate degrees from UCT
While UCT is an excellent university with a strong financial programme, and the asset management industry is concentrated in Cape Town and so will naturally draw from it, this is still an incredible statistic. It certainly raises questions about diversity.
Almost half of all fund managers are CFA charter holders, yet on average they underperform fund managers who are not
Across the sample, 49% of fund managers were CFA charter holders. However, on average across all categories, fund managers with a CFA qualification underperformed (10.24%) managers without (11.59%) a CFA qualification over the past five years.
“Having a CFA is almost the ticket to the game within asset management, but if you look at performance it doesn’t look like having a CFA is doing what its supposed to be doing,” says Leigh Kohler, head of research at Glacier.
“I think there is so much power in diversity generally and I think when it comes to hiring of investment talent, it seems that attending UCT and having a CFA has become the benchmark, and that does create some homogeneity. I think from a recruitment perspective asset managers probably need to look at diversifying their UCT and CFA risk.”
Only 18% of investment professionals are female
The industry very clearly remains male dominated. Not only is less than one in five investment professionals a woman, but in the entire sample of 146 funds, only one woman held the position of portfolio manager.
Average employment equity (race) representation is 31%
While there is a commitment from many companies in the industry to improve their employment equity, it still appears to be happening more slowly than many of them would like.
“You shouldn’t define diversity as strictly along racial or gender lines, as ultimately the benefit of diversity is the diversity of thought,” says Kohler. “But people from diverse backgrounds, naturally view the world differently, and so I think the long-term outcome of increased diversity must be beneficial for investment decision making.”
The average size of an investment team is 11 people
“This was very interesting for me because we often speak about teams being either big or small, but how do we define that?” says Kohler. “It must be relative to something.”
This study suggests that any team of 10 people or fewer in South Africa can be considered relatively small, and 12 or more relatively large.
Big teams can outperform
Glacier analysed the sizes of investment teams against their five-year standard deviation and performance numbers. This did not reveal what the optimal team size might be, but rather that it’s actually possible for any sized team to perform well.
