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Investing
Friday, February 1, 2002
Volatile times

Over the past two years R112 billion worth of investment assets - life policies, retirement funds and unit trusts - have been transferred as a result of mergers and takeovers. The two biggest in this figure is a large portion of Southern Life’s approximately R50 billion worth of assets that were integrated into Rand Merchant Bank, and another R50 billion worth of Fedsure assets that were recently absorbed into Investec Asset Management.

During the two-year period we also saw African Harvest buy and integrate Velocity’s assets, while Franklin Templeton bought into Nedcor Investment Bank’s (NIB) asset management company. The R2 billion in assets held by Flemings and its empowerment vehicle Kwesi were acquired by BOE Asset Management while Appleton, e-trade and RAD merged into a group with assets of R3,5-billion, which was in turn bought by PSG.
Last year Franklin-Templeton NIB bought and integrated the assets of Greenwich Asset Management, and Deutsche Morgan Grenfell closed down its R2,5 billion asset management business in this country.
Glenn Silverman, chief investment officer at Investment Solutions, notes that huge numbers of investors and staff were involved in these enormous changes. “We have also tracked the number of personnel changes within the asset management industry concerning 73 people, including ten at the executive level.
“We regard a change in top management, when the team loses its leader, as a ‘defining event’ within an asset management company.”
Investment Solutions’ research for the two-year period there were over 240 movements within the local asset management industry, again with more than five changes at the top. Indeed, the number of defining events is on the increase.
According to Mr Silverman, some examples of a ‘defining event’ for an asset manager would be when it gains or loses staff or assets; changes its processes, philosophy or structure; changes benchmark, systems or valuation methods; or is going through significant corporate activity.
“While these events may not seem to be important, management’s eye will be off the ball, so to speak, which could compromise the handling of clients’ assets. The markets are also becoming more volatile and asset managers need to be in a position to concentrate all their energies on managing the assets that have been entrusted to them. It is our job to ensure that funds are managed effectively, which is why we keep a very close watch on asset managers in these circumstances.”
With this in mind Investment Solutions initiates about 21 contacts with managers - either face-to-face or telephonically - every month.
 

Copyright © Insurance Times and Investments® Vol:15.1 1st February, 2002
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