Overview of CIS Industry December 2012
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
IIFA statistics CIS Statistics December 2010
IIFA statistics (Assets under management) CIS Statistics December 2010
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
Assets for CIS industry (All Rand denominated funds) R1.23tr – Previous methodology - Double counting removed from FoF’s only R1.20tr – All double counting removed - FoF’s - Hybrid funds
CIS Statistics December 2010 Assets for CIS industry (All Rand denominated funds) (Previous methodology) CIS Statistics December 2010
CIS Statistics December 2010 Assets for CIS industry (All Rand denominated funds) (All double counting removed) CIS Statistics December 2010
CIS Statistics December 2010 Net quarterly flows (All Rand denominated funds) CIS Statistics December 2010
CIS Statistics December 2010 Net annual flows by sector (Excluding Worldwide and Foreign sectors) CIS Statistics December 2010
CIS Statistics December 2010 Domestic funds asset split December 2007 (Excl. Worldwide and Foreign sectors) (Previous methodology) December 2007 December 2012 CIS Statistics December 2010
CIS Statistics December 2010 Domestic funds asset split December 2007 (Excl. Worldwide, Foreign and Money Market sectors) (Previous methodology) December 2007 December 2012 CIS Statistics December 2010
Net annual inflows (Sector winners) • Domestic – AA - Prudential Variable Equity (R39.7bn) • Domestic - Fixed Interest - Varied Specialist (R27.6bn) • Domestic – AA - Prudential Low Equity (R25.4bn) • Domestic - Fixed Interest - Income (R11.9bn)
Net annual outflows (Sector losers) • Domestic - Fixed Interest - Money Market (-R9.3bn) • Domestic - Equity – Value (-R1.0bn) • Domestic - Equity – Growth (-R934m) • Domestic - Equity – Financial (-R240m)
Largest CIS Managers (All funds) Stanlib Allan Gray Investec Old Mutual Coronation Sanlam Absa NedGroup Investments Prudential Momentum 79.5% of the assets of the CIS industry
Largest CIS Managers (Excluding Money Market funds) Allan Gray Investec Coronation Stanlib Old Mutual Sanlam NedGroup Investments Prudential Momentum Absa 79.7% of the assets of the CIS industry
Largest funds Allan Gray Balanced Fund R61 653 Absa Money Market Fund (Values in Rand million) Allan Gray Balanced Fund R61 653 Absa Money Market Fund R57 849 Standard Bank Money Market Fund R35 676 Allan Gray Equity Fund R32 382 Investec Opportunity Fund R29 636 Allan Gray Stable Fund R28 976 Coronation Balanced Plus Fund R28 258 Standard Bank Corporate Money Market Fund R27 489 Investec Money Market Fund R21 564 Stanlib Income Fund R20 680
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
CIS Statistics December 2010 Sector performances (One year to 31 December 2012) CIS Statistics December 2010 Source: Profile Media
CIS Statistics December 2010 Sector performances (Three years to 31 December 2012) (annualized performance) CIS Statistics December 2010 Source: Profile Media
CIS Statistics December 2010 Sector performances (Five years to 31 December 2012) (annualized performance) CIS Statistics December 2010 Source: Profile Media
CIS Statistics December 2010 Sector performances (Ten years to 31 December 2012) (annualized performance) CIS Statistics December 2010 Source: Profile Media
CIS Statistics December 2010 Sector performances (Twenty years to 31 December 2012) (annualized performance) CIS Statistics December 2010 Source: Profile Media
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
Indices performances (In Rand for the 12 months ending 31 December 2012) 26.7% 21.9% 20.9% Source: Inet Bridge
Indices performances (In Rand for the 5 years ending 31 December 2012) 56.8% 34.8% 12.1% Source: Inet Bridge
Indices performances (JSE All Share (price) index – 12 months ending 31 December 2012) 31/12/2012 39 250 22.7% 31/12/2011 31 986 Source: Inet Bridge
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
Assets for FCIS industry CIS Statistics December 2010
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
What is a Hedge Fund? It is nothing more than a Fund managing conventional asset classes incorporating gearing, script borrowing, non-naked short selling and long positions for investment purposes Focuses on reducing portfolio risk, capital preservation, low correlation positive returns while meeting or exceeding client expectations - AIMA and ASISA presentation to FSB March 2009
Overview of SA Hedge Fund Industry AUM : R35.8bn (est. as at 31-Dec-2012) 62 Active Single Manager Cat IIA licensed managers (excluding FoHF managers) 106 different Mandated funds with a trend towards segregated mandates 27 of current ASISA members have Cat IIA licenses or Cat IIA licensed affiliated companies –managing more than 60% of the AUM 15 Single Manager teams manage 80% of the AUM - similar trend as with Unit Trusts
Overview of SA Hedge Fund Industry (continued) Majority of Assets managed in Equity Long/Short strategies – majority of underlying instruments are exchange listed (similar to unit trusts) 50% of Assets managed by managers with at least 7 years of active hedge fund experience Hedge Funds have formerly been recognised as an integral part of the Retirement Fund investment universe in the recently revised Regulation 28. Previously Hedge Funds were included under the heading of “Other Investments”
Hedge Fund AUM Growth Source: Novare Investments
Asset Breakdown by Strategy Source: Novare Investments
Asset Breakdown by Sub-Strategy Source: Novare Investments
Investment Vehicle / Structure Source: Novare Investments
Self Regulatory Environment Administration / Valuation / Reporting 99.9% of Industry Assets independently valued by independent 3rd party 67% of funds report NAV’s either daily or weekly and 32% report monthly 79% of Mandate compliance is monitored externally or externally and internally Funds managing 84% of AUM use one or more prime brokers 89% of AUM can be liquidated within 30days
The move to Product Regulation National Treasury and the FSB have proposed adding two additional branches / categories of funds under CISCA The first tier “Hedge Fund Light” will be similar to the globally recognised UCITS structure and will impose limits on the investment powers of the managers similar to a Unit Trust The second tier “Restricted Hedge Fund” will be aimed at “professional investors” and have fewer and lower mandate restrictions Both tiers of Funds will have similar administrative, valuation, reporting and legal structure requirements.
Proposed Limited Investment Powers “Hedge Fund Light” Funds : Position size concentration similar to Unit Trusts Maximum Gross exposures 200% Maximum exposure to a single prime broker 40% Bi-Weekly dealing and daily valuations
Managing Risks FSB “Notice on Hedge Fund FSP Disclosures,2008”: Leverage Illiquidity Potentially higher fees Specific risks to a hedge fund strategy
Ave Net Equity and Gross Exposure Source: Novare Investments
Liquidation of Underlying Assets Source: Novare Investments
Management Fees Charged Source: Novare Investments
Specific Risks (Fixed Interest Funds) Source: Novare Investments
Single Managers vs. High Equity Source: Hedge News Africa & Morningstar
Equity Long/Short vs. General Equity Source: Hedge News Africa & Morningstar
Market Neutral vs. Low Equity Source: Hedge News Africa & Morningstar
Multi Strategy vs. CIS Flexible Source: Hedge News Africa & Morningstar
Fixed Income vs. CIS Bonds Source: Hedge News Africa & Morningstar
Thanks to Hedge News Africa Riscura Analytics Novare Investments Capital Exchange Partners
Agenda International view CIS industry overview Performance figures Index data FCIS Hedge funds Cost of caution
ALSI vs Prime Source: Inet Bridge
R100 000 investment 3 years 5 years 10 years R147 960 R144 634 (ending 31 December 2012) 3 years 5 years 10 years General Equity R147 960 R144 634 R535 483 Prudential Variable Equity R136 025 R145 780 R407 025 Money Market R118 933 R145 442 R216 894
Thank you