The total net inflows recorded by JSE-listed asset manager Coronation Fund Managers in the six months to March displayed the first signs of cooling off from its cyclical high performance. But while the fund manager said last year that its steep growth would flatten, it still recorded significantly high performance in areas such as net flows from retail investors.
Coronation attracted net inflows of R14.7 billion in the six months to March, significantly lower than the R22bn recorded in the comparable period last year. But its total net flows (both inflows and outflows) of R17bn from retail investors was almost double its market share in that segment.
“We had 27 percent of the industry flows. But our market share in the long-term retail is 14.5 percent. That is not sustainable so we do expect it to normalise,” Coronation chief executive Anton Pillay said.
Coronation’s share of the long-term retail market in South Africa rose from 13.6 percent in September last year.
During the six-month period, Coronation’s total assets under management increased by 11 percent to R547bn.
International assets under management represented R105bn of this, compared with R85bn at the end of its financial year last September.
The group increased its interim revenue by 56 percent to R2.3bn allowing it to declare diluted headline earnings a share of R2.754, 69 percent higher than a year earlier. Profit generated from fund management operations grew by 67 percent to R1.29bn.
But repeating a performance of this nature next year or even in the second half of the current financial year depends on the equity markets and the company’s ability to attract net inflows.
“We don’t know how long we can sustain this. Like we indicated at the end of our financial year, the underlying data – the JSE performance, delivering 25 percent, and strength in global equity markets – contributed to this performance,” Pillay said.
He added that Coronation expected to see even its client growth flatten.
Last month, Coronation was again crowned as the top manager of domestic unit trust funds in the quarterly PlexCrown Fund Ratings survey, which rates unit trust managers’ performance.
It overtook Allan Gray in this category in the fourth quarter of 2012. At this year’s Raging Bull Awards, it was announced as the top asset manager for a fifth time.
Pillay said Coronation aimed to be in the top quintile of any performance rating and even when it was on the other end of the equity markets cycle, it wanted to deliver consistent long-term performance.
This was even though it recently added platinum producers and retailers to its portfolios. In February it bought into retail stores including The Foschini Group and Woolworths as well as Impala Platinum and Northam Platinum.
On the flip side of the interim results, Coronation’s institutional business recorded net outflows of R2.3bn during the period under review. The company attributed this mainly to the rebalancing of its clients’ portfolios and the South African equity and multi-asset class products being closed to new investors. The international pooled and segregated mandates, however, attracted net inflows of R6bn.
Coronation shares plunged 6.7 percent to R96 yesterday.