Asset managers have to pick equities and direct investments across categories and geographies. Emerging markets come with higher risks but they also offer the chance of higher returns.

The listed asset management segment of the JSE has looked strong over the past year with attractive dividend payouts in most cases and considerable growth in assets under management (AUM). This follows a massive surge in local equity prices on the back of sparkling performance from the gigantic Naspers/Prosus stable and the resources sector. The JSE All-Share index grew by more than 50% in 2025 and continued this performance into the early months of this year.

Janina Slawski, head of investment consulting at Alexforbes, said economic conditions appeared to be improving by the end of 2025, supported in SA by moderating inflation, fiscal discipline and sovereign upgrades. ‘South Africa had entered a low-inflation targeting environment. We were upgraded. We came off the FATF [Financial Action Task Force] grey list. We had fiscal discipline. So, basically, everything looked incredibly rosy. And then, on 28 February 2026, US President Donald Trump changed everything,’ she said.

Alexforbes produces an annual Manager Watch Survey, which spans 94 asset managers and 875 different investment strategies, including all the major SA asset management companies. It covers big asset managers listed elsewhere on the JSE, such as Stanbic. Stanbic, with AUM of R1.5 trillion, is bundled together with its parent, Standard Bank, which is listed in the banking segment. The publication does, however, exclude assets managed for international (non-SA) clients by the big international operations with London co-listings. At the launch of the most recent survey, in April, Slawski noted that the attack on Iran by the US and Israel – which triggered a global stagflationary shock crisis – has inverted the global investment outlook, turning it deeply negative.

These are the circumstances where an asset manager’s real abilities are tested. Lebo Thubisi, CEO at Abax Investments, argues that ‘for much of the last decade, asset managers have benefited from a powerful tailwind: risking markets’.

In fact, Thubisi, while admitting that it is a ‘contrarian view’, goes so far as to argue that ‘future growth may have less to do with investment performance than many in the industry would like to admit. Performance remains a prerequisite, but growth is increasingly determined by relevance’ to clients’ needs. ‘The recent (positive) dynamic is unlikely to persist, and attention has now shifted to where managers can genuinely differentiate and attract flows,’ he says.

‘The surprising reality is some of South Africa’s most attractive investment opportunities may now sit outside public markets,’ adds Thubisi.

The asset management segment offers a range of different options, differentiated by size and global spread in addition to varying investment strategies. There are two big international operations in Ninety One and Quilter, both companies with SA roots but dual-listed on the London Stock Exchange and reporting results in sterling.

Ninety One is the largest asset manager on the JSE measured against the standard benchmark of AUM.

The company, formerly Investec Asset Management, manages assets for SA and international clients, valued at £171.8 billion (R3.9 trillion) at the end of March. This makes it the largest asset manager on the African continent, well ahead of the more commonly referenced SA public sector pensions manager, the Public Investment Corporation with its R3 trillion AUM.

This was the first period for which Ninety One’s AUM had been boosted by the inclusion of the £18.3 billion (R400 billion) business it had acquired from Sanlam. The deal, which was first announced in November 2024, has now cleared regulatory hurdles in both SA and the UK. The press release at the time of the announcement stated that ‘Ninety One will gain preferred access to Sanlam’s distribution network, expanding its market reach through Sanlam’s established channels and into savings pools outside the normal reach of the Ninety One brand’. Sanlam’s clients gained access to Ninety One’s global reach and stability.

Ninety One’s results, announced in June, were at the very least solid. Adjusted operating profit increased 12% to £211.3 million (R4.6 billion) and the share paid a dividend (13.4 pence) 1% higher than last year. It also reversed the net investor outflows of 2024/5, bringing in £2.9 billion (R63 billion) in new client money for the most recent year. Despite these laudable numbers, the company’s share price fell between 6% and 7% on its June results, possibly (as Ninety One itself suggests) because of concerns about the Middle East conflict and general market anxiety about increased global geopolitical risks.

The other large dual-listed asset manager on the JSE is Quilter. However, despite its origins in Old Mutual, a company with a history that goes back to almost the establishment of SA’s industrial economy, it is now largely focused on the UK. Previously Old Mutual Wealth, it was unbundled and listed in London in 2018. On its website, the company describes itself as ‘a leading UK-centric wealth management business’. The company focuses on affluent or high-net-worth clients and has a presence in the Channel Islands. Quilter has £141 billion (R3 trillion) worth of AUM.

The company has put in a more than solid performance over the past year, with earnings (after deductions) up 14%, a sharp improvement on the 6% recorded in 2024.

Ratings agency Fitch expects ‘the ratio to remain above 10% over the medium term, supported by continued cost discipline and revenue generation from strong client retention and higher assets under management and administration’. However, the ratings agency warns, ‘geopolitical risks and market volatility could weigh on flows, which may increase earnings volatility’.

Quilter’s share price on the JSE has posted steady, although not spectacular gains on the JSE over the past two years.

The company’s Johannesburg dual listing raises the issue of whether investors should allocate capital offshore or domestically. This is a particularly pertinent question for the three highly competitive mid-cap companies listed on the JSE asset management segment: Alexforbes, Coronation and Sygnia. Mid-caps can be particularly attractive investments as they tend to find it easier to pursue growth than big international players.

Alexforbes (AUM of R733 billion) is a multi-manager, which means that the firm allocates capital across multiple, distinct, third-party sub-managers. About half the company’s returns are market-driven, with the rest being from more stable fee-based income streams for professional services and corporate solutions. In June, the company was able to report a strong performance with a 20% increase in profits and a similar rise in AUM.

The smallest mid-cap JSE asset manager, Sygnia (AUM R460 billion), has also been the best performer in the segment. With a 24% increase in revenue for the year to March, and a 24.5% increase in dividends, the company also offers a share price trending upwards. Sygnia has demonstrated its mid-cap nimbleness by launching a dedicated advanced artificial intelligence (AI) investment fund. The fund, which the company itself admits is ‘high risk’, seeks exposure to the massive early-mover gains achieved globally in disruptive technologies such as AI, large language models, cloud storage, big data, social media and e-commerce tools.

By contrast, Coronation’s share price dropped about 10% in early June after the company announced a 2% drop in AUM. Coronation was punished by the market for being underweight in gold assets during the yellow metal’s spectacular recent run, despite its generally solid performance. Nevertheless, Coronation has stuck to its guns, stating in May that it would remain underweight in the precious metal as it believed the risks outweighed the advantages.

Thubisi argues that ‘the onshore/offshore debate is not an either/or decision’. He notes that ‘South African asset managers have steadily increased their offshore allocations over the past several years’.

This has been facilitated by amendments to South Africa’s Pension Funds Act in 2022 to allow an offshore allocation of up to 45% and has dovetailed with push factors such as persistent low economic growth, electricity supply challenges and political uncertainty.

Thubisi, however, also insists that ‘the industry has become too comfortable with the assumption that offshore automatically means better returns’. He argues that ‘the reality is that future returns are ultimately determined by the price paid for an asset, not where it is listed’.

Thubisi says that engagements with his clients, especially institutional investors, have seen ‘growing interest in revisiting opportunities in local equities’.

He points out that SA equities are trading at a discount to global peers. ‘Many high-quality domestic businesses continue to generate attractive cash flows, maintain strong balanced sheets and trade on valuations that reflect a significant degree of pessimism,’ he notes. With downside risk already priced in, these are opportunities difficult to replicate elsewhere.

According to Thubisi, the tech disruption is a double-edged sword and comes with its own set of risks.

He points out that, in addition to possibly over-high valuations, ‘many investors who describe themselves as globally diversified remain heavily concentrated in a small group of US technology companies through passive allocations. While this has worked well over the past decade, concentrat„ion risk should not be mistaken for diversification’.

The other two firms listed on the JSE’s asset management segment are small entities. SABVest Capital is controlled by a family trust and has AUM of R6.5 billion.

Zeder is even smaller. An agribusiness specialist with AUM of about R2 billion, the company appears to be in the process of liquidating its holdings and returning capital to its investors. Neither share has been particularly liquid in the past.

The future of tech is, alongside geopolitical risk, the major uncertainty asset managers face at the moment. Tech valuations are widely regarded as a ‘bubble’, having little or no relationship to cashflows.

When the internet bubble burst soon after the millennium, investors lost $5 trillion in market capitalisation with the tech-heavy Nasdeq tumbling 78% in two and a half years. A correction on a similar scale has now been on the minds of analysts for a while.

It is not unreasonable to suggest that it will be how asset managers handle the risks involved that divides the pack.

By David Christianson
Image: iStock