Your money: Watch out for those sneaking up on the CIA
Most pension funds are managed by Coronation, Investec, or Allan Gray ... but change may be afoot
The stranglehold the so-called CIA managers (Coronation, Investec and Allan Gray) have on the pension fund market continues. They would have been the right choice in recent years. According to the Alexander Forbes Large Manager Watch, they held first, third and fourth position over five years. Not exactly with stellar returns: top ranked Investec gave an annualised 8.8%.
But this is in an environment in which the JSE has given a barely inflation-beating 5.8%. It is only international equities, at 15.1%, that would have allowed Investec to score what they did. Prudential, which has been most successful at making inroads into the CIA market share of balanced pension market, was second with a return of 7.6%. Prudential has gathered R17bn of institutional assets.
James Downie, a veteran asset consultant, now in the Miton Optimal group, says the large teams and track records of the CIA managers indicates that they can still perform well, but not to the extent they did when they were boutiques. “They can only buy big positions in large caps. It hasn’t been an issue so long as large caps have outperformed, but it will be when there is a small cap rally.”..