Coronation Fund Managers shares closed 3.79 percent higher at R43.30 on the JSE on Tuesday. Photo: Pexels

CAPE TOWN – Coronation Fund Managers on Tuesday rewarded its shareholders with a significant distribution of 100 percent of after-tax cash profit for the 12 months to end September that brought the total gross dividend to 341 cents.

Chief executive Anton Pillay said while the long-term valuation-driven asset manager produced encouraging out-performance for their clients’ portfolios, the financial results reflected the weak economic environment, which had affected both market returns and the formal savings industry. 

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

Pillay said the challenging markets over five years had resulted in many attractively priced opportunities from which active managers could construct their client portfolios. 

“We are optimistic about the investment opportunities that key markets present and believe that clients should see better returns in the next five years,” he said.

Coronation’s average assets under management (AUM) fell 5.9 percent compared to leading to a 14.5 percent decline in revenue to R3.3 billion.

Operating expenses, which Pillay said was one aspect that management were firmly in control of, decreased by 6.9 percent, as fixed costs increased by only 2.4 percent and variable costs fell by 11.7 percent. 

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

He said that while they were encouraged by the good short-term performance delivered by their portfolios in the last year, the firm was mindful that long-term performance remained the true measure of its success for clients and stakeholders.

Pillay said clients representing more than 50 percent of Coronation’s total institutional assets had been invested with the company from more than 10 years. 

“Of these client assets, 97.5 percent have outperformed their benchmarks since inception on an asset-weighted basis,” he added. 

He said all Coronation's domestic and global institutional portfolios with a track record of more than 10 years had delivered “enviable active returns since inception.”

All domestic and global flagship unit trust funds ranked first or second in their respective Morningstar categories since inception. 

Collectively, the assets invested across all of Coronation's domestic and global flagship unit trust funds represented more than 90 percent of total retail AUM, and had track records that span between 10 and 23 years, he said.

The weak economy had, nevertheless, affected market returns and the formal savings industry.

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

Progress had been made to transform the business to reflect the country’s diversity.

Coronation Fund Managers shares closed 3.79 percent higher at R43.30 on the JSE on Tuesday.

BUSINESS REPORT