10 July 2019 - 05:07Flight to safety: Local economic and political uncertainty has given wealthy South Africans an appetite for investing in ‘safe’ jurisdictions. Picture: 123RF/Rabia Elif Aksoy
Notably absent are names such as Vanguard and State Street, large passive managers that have benefited from the global shift into index investing. In 2018 flows into US passive equity funds almost surpassed those of active managers, with about 48% of assets now held by index strategies. SA has been fraught with economic and political uncertainty and the appetite to invest in “safe” jurisdictions has been the recreation of SA’s wealthy.
From an asset management industry perspective, foreign asset managers probably find the SA market attractive in terms of fee margins. Internationally fund manager fees have been compressed, sinking to a global asset-weighted average of 44 basis points. In SA, these fees have not been compressed to the same degree as fees for passive investments, so have not really provided much competition to the local active asset managers.
No one wants to invest here. People have eyes, ears and brains .