In asset management, big is definitely beautiful. And the grand old dame is undoubtedly Old Mutual Asset Managers (OMAM), the largest asset manager in SA with R244bn under management, almost R60bn more than second-placed Sanlam Investment Management.
Its parent's life fund still accounts for 60% of total assets - a secure source for more. It is at a low margin, though, as OMAM charges only 10-15 basis points to manage it.
But the life fund no longer manages all Old Mutual's life assets. A multimanager, Symmetry, has been set up to compete with OMAM.
Unlike other life office-based asset managers such as Sanlam Investment Management or the old Liberty Asset Management, OMAM has not been through a sustained performance slump.
In the Alexander Forbes Large Manager Watch, which surveys balanced portfolios, OMAM was third out of 10 over the year to March, fifth over three years and fifth over five years. Its positioning is as a stable, consistent manager.
The unsung success story at OMAM has been the Profile range of pooled retirement fund products. Launched six years ago a little ahead of their time, they were the first risk-profiled range of retirement fund products. These allow funds (and members themselves ) to select conservative, balanced or aggressive options.
OMAM Profile Pinnacle, which varies its asset allocation aggressively according to market conditions, has been the best performer over one, three and five years in the dynamic category of the global manager watch, with a solid 8,9% annual return over three years and 10,0% over five years.
Profile Capital has been the best-performing fund in the capital preservation section of the Global Manager Watch, with an 11,6% annual return over three years and 12,6% over five years.
One relatively disappointing area has been unit trusts, but this has received attention. Old Mutual Unit Trusts recently received the most improved company award from Standard & Poor's Fund Services.
OMAM was incorporated as a separate company six years ago and it is no longer run like the investment department of a life office. Segregated retirement funds have grown fast and now account for R52bn under management, making this area larger than the whole of competitors Allan Gray or Coronation.
Last year OMAM abolished the post of chief investment officer. The main decisions are taken by two policy groups, the Equity Review Group and the Asset Allocation Group.
Though Old Mutual has sizeable asset management interests in the US and the UK, it has not adopted the Investec model of running its asset management business on a global basis.
OMAM (SA) MD Tim Cumming says its main role is to serve a domestic client base: it can use the services of the relevant parts of the group's international offering when necessary.
Cumming said recently: "Trying to integrate the business would have taken a huge amount of management time. It is wonderful to have a grand vision of a global company, but it is not the only model one can use for excellent products and service to clients."
Where it does not have the expertise in-house, OMAM is happy to form an external alliance.
It uses New York-based Ivy Asset Management, for example, for its alternative investments as none of the Old Mutual US affiliates has expertise in running funds of hedge funds.
It is notoriously difficult to predict what returns fund managers will provide on the basis of past performance. OMAM will never provide the aggressive outperformance of an Allan Gray, but it will not go through the same bouts of underperformance either.
