Alexander Forbes Asset Consultants produce a series of performance surveys, on a monthly basis, reflecting the returns of the fully discretionary, multi-asset class portfolios, managed in terms of Regulation 28 of the Pension Funds Act, within the South African asset management industry.
This survey series, called Manager Watch, is structured to show the performance of different risk profiled portfolios. The most prominent and renowned of this survey series is the Large Manager Watch Survey, comprising the performance of the ten largest South African asset managers in terms of their total assets under management.
The Large Manager Watch survey is further split to show the performance of domestic-only mandate portfolios (SA Large Manager Watch Survey) and portfolios with international mandates (Global Large Manager Watch Survey).
Traditionally, the participants of the Large Manager Watch (LMW) Survey have remained fairly static. However the recent spate of consolidation within the asset management industry has necessitated certain changes to the LMW Survey. Earlier this year, we saw the merger between SCMB and LIBAM from which StanLib arose. This merger meant that there were now only nine LMW participants. As such, Alexander Forbes Asset Consultants introduced Metropolitan as a new entrant into the LMW Survey effective as from 1 June 2002.
More recently, the corporate activity with Old Mutual/Nedcor/BoE has again necessitated further changes to the LMW Survey. Frank Richards, head of performance surveys and consultant at Alexander Forbes Asset Consultants says, "FTNIB will in all likelihood ceaseto exist in its current form. This follows from Old Mutual`s announcement that they plan to rationalise to allow for the consolidation of the acquired banking and non-banking operations of BoE within the Old Mutual Group."
A number of regulatory approvals are required before the transactions can be finalised and these are only expected to take place early next year. Richards says that the changes include the merger of the private client wealth management businesses of BoE and NIB.
"Nedcor exercised a call option and now owns 100% of FTNIB, which has significant retail/private client assets. Going forward, FTNIB will focus on retail fund management and will form part of the wealth management cluster of the Group, which will necessitate realignment of the business," says Richards. "FTNIB, as we know it, will therefore cease to exist."
As a result of the above, Alexander Forbes Asset Consultants took the decision to replace FTNIB in the Alexander Forbes Global Large Manager Watch Survey with effect from 1 January 2003. Although there are several criteria which are considered in an attempt to select the new entrant, the main determining criteria are, firstly, the management of global, fully discretionary, multi-asset class portfolios; and secondly, the total assets under management (managed for clients domiciled in South Africa).
"As at the end of September 2002, Prudential`s assets under management equated to approximately R15.3 billion, making them the 10th largest investment management company managing global, fully discretionary, multi-asset class portfolios" says Richards. "As such, Prudential will replace FTNIB in the Alexander Forbes Global Large Manager Watch Survey from 1 January 2003. In addition, Prudential will also, by default, replace FTNIB in the Alexander Forbes SA Large Manager Watch Survey from 1 January 2003."
Richards says that in order to ensure that the survivorship bias that is often prevalent in peer group surveys is removed, a notional data series will be constructed for average and median calculation purposes.
"Although Prudential`s historical returns will be reflected in the Large Manager Watch Surveys from 1 January 2003 onwards, the average and median figures will be calculated using FTNIB return data up to the end of December 2002, and Prudential`s returns thereafter. The median and average history will remain unchanged, facilitating an appropriate yardstick for those managers who make use of the peer group figures for performance comparison` says Richards.
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