There are two ways of measuring the top unit trust management company (manco): by size or by performance.
Size is arguably the most important measure because, unlike asset managers themselves, a manco's job is to gather assets. Since the merger of Standard Bank Unit Trusts and Liberty Collective Investments last year, Stanlib Collective Investments is now clearly the largest manco, with R44,7bn under management. And it has achieved this without hosting any white-labelled assets other than Melville Douglas, which is a sister company as it is the private client asset management arm of Standard Private Bank. (White-labelled assets are funds managed on behalf of third parties, such as firms of brokers and small asset managers.)
In contrast, the number three manco, Sanlam Collective Investments, with R25bn under management, hosts unit trusts on behalf of financial advisers Citadel and multimanagers Plexus, neither of which has a corporate relationship with Sanlam.
To get a true picture of the potential profitability of management companies, it is useful to look at their assets both with and without money market assets. Absa is the second-largest manco with R34,8bn but it falls right down to 11th without money market assets.
Old Mutual Unit Trusts was the largest manco in SA for 30 years but it is now fifth, after Stanlib, Absa, Sanlam and Investec, including money market funds, and third after Sanlam and Stanlib excluding them.
Like Stanlib and Investec, Old Mutual does not white-label funds outside its own group. It hosts the Galaxy retail multimanager funds and the Symmetry institutional multimanager funds.
Mancos need scale to be profitable and it is doubtful that any management company with less than R500m under management can make money. They certainly cannot afford to market themselves to the public with so little income.
The subscale Gryphon Imperial manco was sold in February to Coris Capital, administrators of the Iscor pension fund, who will use the manco to pool assets in their preservation and retirement annuity funds. Foord, with R169m, used its management company to pool private-client assets that were no longer economical to manage on a segregated account basis.
The smallest manco in SA, Appleton, has just R32m under management, but it will soon be merged into PSG, which holds R714m, including white-labelled funds.
Innofin, which holds only a R1,47bn money market fund, is likely to disappear now that Sanlam has bought out Innofin's minority shareholder, Macquarie Bank of Australia.
Dave Macready, head of Nedcor Collective Investments, predicts that independent asset managers will not aim to own mancos in the future as their core skill is "manufacturing" investment performance and not distribution. Distribution will be left to the retail banks and to life offices with large tied agency forces.
Nedcor acquired the African Harvest management company and Harvest now focuses on the institutional market and it runs unit trusts for Nedcor on an arm's-length basis.
Mancos, of course, should also be judged by their overall investment performance. The best yardstick for this is the quarterly Plexus survey. In the overall rankings there was a tie between Investec and Coronation (Investec was one-tenth of a basis point ahead).
Taking account of both assets and investment performance, Investec would have a strong claim to the top manco slot. It does not have tied agents or a retail branch network - though don't underestimate the power of its private bank.
But Stanlib wins the top manco award for the year on the grounds of its size (it is R10bn larger than its closest competitor), its investment performance (it was fourth out of 11 in the Plexus rankings) and its newsworthiness this year. The fund amalgamation on March 1 was the largest undertaken in SA, with 600 000 clients involved.
