Coronation Fund Managers, one of the largest investment managers in the country saw net outflows of R43,9 billion. Picture: CHRIS RATCLIFFE, BLOOMBERG, 2012 BLOOMBERG FINANCE LP.
CAPE TOWN -  Coronation Fund Managers, one of the largest investment managers in the country saw net outflows of R43,9 billion, or 7.5 percent of its assets under management (AUM) in the year to September 30 and shareholders should expect outflows to remain negative until the industry flows turn positive.

The timing of this was difficult to predict, as the collective investment schemes industry was being impacted by a shrinking pool of formal savers, which was further aggravated by the weak economic environment, CEO Anton Pillay said at the release of the annual results Tuesday.

The weak economy had also affected both market returns and the formal savings industry, notwithstanding some encouraging outperformance by their clients’ portfolio’s under very tough conditions in 2019.

“The key asset classes from which we construct the bulk of our client portfolios delivered lacklustre returns for the period under review, with domestic equities up only 1.9 percent and emerging market equities up 4.8 percent in rands,” he said,

Nevertheless, the challenging markets seen over the last five years had resulted in many attractively priced opportunities from which active managers cojuld construct their client portfolios, and they company was optimistic that clients should see better returns in the next five years.

Coronation’s total average AUM was down 5.9 percent in the financial year, compared with the average AUM in the prior 12-month period, due to the impact of sustained weak market returns. The drop in average AUM contributed to the decline in revenue of 14.5 percent to R3.3 billion.

Operating expenses decreased by 6.9 percent, as fixed costs increased by 2.4 percent and variable costs decreased by 11.7 percent. The combined effect was a decrease of 18.7 percent in diluted and basic headline earnings per share to 341.9 cents.

“We are pleased that our variable cost model, where costs typically decrease in periods of declining revenue, once again demonstrated its power,” he said.

Nevertheless, shareholders were rewarded with a significant distribution for the period.

 A 100 percent of after-tax cash profit was distributed, which, together with the interim gross dividend of 165 cents per share, brought the total gross dividend to 341 cents for the year.