Welcome to our asset management marketing focus

This week’s roundup focuses on the South African asset management space, bringing you news about crypto funds, blockchain, AI and Sygnia’s hedge fund decision.


Website Spotlight: Allan Gray

Allan Gray, one of South Africa’s top asset managers, makes investing accessible to all with a website that is easy to navigate and understand.

The homepage is minimal, focusing on how the firm builds long-term wealth for its clients with a simple graph showing the performance of the Allan Gray Equity Fund compared to the benchmark over the past 20 years. Overall the homepage is beautifully designed and branded, with just enough information to draw in the user.

If you venture further into the site, you’ll find comprehensive pages on the different types of investments Allan Gray offers, from unit trusts to tax free investments and retirement savings. Each page provides useful information on how much money you’ll need to invest in that specific product and when you’ll be able to withdraw your money again. Allan Gray’s fund factsheets are also integrated into these pages, providing a seamless, interactive experience. Users can choose the level of detail they would like to view and easily toggle between different funds in each category.

Alternatively, investors can also access information on specific funds by navigating to the ‘All investment options’ page.

Furthermore, the Allan Gray website also features a useful Frequently asked questions page where users can view FAQs related to their various investment products. Allan Gray also regularly provides its investors with industry insights through its blog.

Funds in Focus: BitFund Crypto Funds

Recently launched South African cryptocurrency investment platform BitFund provides investors with exposure to index portfolios of more than 20 of the largest cryptocurrencies.

BitFund aims to make it easy for South Africans to add diversified cryptocurrency investments to their investment portfolios. Investors that are new to cryptocurrency investment can select from BitFund’s three pre-specified portfolios, whereas more experienced investors can customise their portfolios.

BitFund’s specified portfolios are as follows:

  • Balanced 10 – This portfolio holds each of the top 10 largest cryptocurrencies, weighted by their market capitalisations and is rebalanced weekly.
  • Equal 10 – This portfolio holds each of the top 10 largest cryptocurrencies with equal weighting, each constituting 10% of the portfolio and is rebalanced fortnightly.
  • Capped 10 – This portfolio holds each of the top 20 largest cryptocurrencies, weighted by their market capitalizations, with a maximum holding of 15% per cryptocurrency. Rebalancing occurs weekly.

BitFund founder, Jonathon Ferrer, stated in an article on TechFinancials: “For the first time, investors with limited or no cryptocurrency trading experience who are interested in diversifying their investments can successfully access a multitude of cryptocurrencies in a safe and simple way. All the complication of cryptocurrency trading has been removed in a transparent user-friendly interface. We provide relevant reporting to ensure auditability and transparency into portfolio holdings and rebalancing at a transactional level.”

Firm in Focus: Syngia Asset Management

Cape Town-based asset manager Sygnia Asset Management recently attracted a lot of media attention when it closed all its hedge fund products, ending a 13-year history of offering this investment option.

The decision to close its hedge funds was made by Sygnia CEO Magda Wierzycka, who explained that, the reason for doing so was to protect investors against high fees.

Wierzycka said that Sygnia made a decision that it could not continue paying the high fees charged by hedge fund managers when their performance did not appear to warrant it.

This decision means that all Sygnia’s investors that had funds in these products have to move to other products. For most investors this has already happened. In fact, Sygnia only communicated its decision to close its funds to the market after the majority of withdrawals had been completed.

As reported by Moneyweb, the firm also made sure it could offer investors an alternative, introducing a fund of structured products that could perform the same role as hedge funds – offering returns ahead of cash but with some capital protection.

However, this alternative fund has been criticised by some, as the investment fees are still quite high and similar to that of a typical hedge fund fee structure – 0.8% a year management fee with a 15% performance fee “subject to a hurdle of CPI [consumer price index], scaled down for larger investments”.

In the end, the investors will have the final say, and Sygnia’s investor figures for the next year will likely shed more light on the true success of this move.

Industry Insights

Blockchain is Here

Blockchain developments are accelerating rapidly, with 84% of organsisations surveyed by PwC stating that they have blockchain initiatives underway, and 15% noting that their initiatives are already fully live.

The PwC Blockchain is here. What’s your next move? report also indicates that the financial services industry is currently dominating the development. 46% of respondents identified it as the current blockchain leader, while another 41% expected it to lead in the near-term (3-5 years).

Paul Mitchell, Fintech & Blockchain Lead for PwC South Africa, says: “The survey findings indicate that organisations recognise the importance of working with blockchain – they don’t want to be left behind as blockchain developments gain momentum globally. We are seeing rapidly growing interest in this space in South Africa as startups look to create new businesses around blockchain, and incumbents across industries are learning what blockchain will mean in their context.

“The speed at which blockchain technology is being adopted is unprecedented. There is a growing recognition that this technology has profound implications in many areas, and we are watching it move from a startup idea to an established technology in a fraction of the time it took for the Internet to be accepted as a standard tool.”

AI and Wealth Management

According to a recent report by Thomson Reuters and Celent wealth managers are requesting improved insight into internal, customer, and third-party data alongside alternative data to power AI technology and identify new opportunities that deliver improved outcomes for clients.

According to the report, in recent years, data has become the lifeblood of the modern wealth management organisation. Firms are starting to review the ways their enterprise information is managed and integrate alternative data into their wealth management platforms.  Big data requirements and legacy processing systems make the need for quality internal data to be more accurate, and by using data mining and pattern recognition, new technologies can help flag or highlight areas that the human advisor would not otherwise even consider.

“Smarter advisors equal smarter investors, equal smarter investment decisions. Using artificial intelligence to mine big data represents a seismic shift in the wealth management industry. The potential benefits to advisors and their clients are enormous,” said David Akellian, managing director and global head of Wealth Management at Thomson Reuters. “The challenge, however, is to integrate new technologies like big open linked data and intelligent tagging into more advanced solutions, whereby uncovering critical information and insight based on a client’s portfolio – directly to them via their digital portal.”

In the News

JSE Launches New Trading Platform

The JSE, together with National Treasury (NT) and a multi-stakeholder group consisting of State, the Financial Sector Conduct Authority (FSCA) and the banking institutions servicing primary dealers has launched an electronic trading platform (ETP) for government bonds at the JSE.

“The new platform provides the benefits of a world-class operating environment, transparency, price discovery and settlement assurance to allow issuers to transact anonymously both pre-trade and post-trade, the end result of which will be lower transaction costs and more price discovery, allowing traders to see live pricing,” the JSE said on its website.

Donna Nemer, Director of Capital Markets at the JSE says, “The launch of the ETP for government bonds will undoubtedly position South Africa’s capital market infrastructure amongst the most sophisticated in global Capital Markets.  A more sophisticated market infrastructure benefits issuers, investors and further positions South Africa as an attractive investment destination.  The launch of the Bond ETP was also an important element of South Africa’s commitment to Capital Markets reform at the G-20 group of nations. The culmination of the intensive efforts of a multitude of stakeholders including our technology provider MTS; our nine Primary Dealers, the World Bank as project consultant; the South African Reserve Bank; and Central Securities Depository Participants (CSDPs) has really paid off and this is a proud moment for our country.”

Fintech Startup Targeting Nigeria

Fintech startup Binkabi, that provides a platform for issuing and trading commodities on the blockchain is planning to introduce two Blockchain-based commodity marketplaces in Nigeria, to empower local farmers.

As reported by ITWeb Africa the company offers two complementary solutions: Barter Block, a proprietary smart bartering mechanism, and BinkabiDEX, a decentralised commodity exchange platform.

Barter Block is a direct, cost-effective cross-border commodity marketplace that connects end-buyers and end-sellers of agro-commodities across borders, cutting out middlemen. It features a smart bartering mechanism, and uses Blockchain technology to increase transparency.

BinkabiDEX offers a Blockchain-based trading and settlement layer for commodity exchanges, leaving them to focus on business development, order book matching and compliance.

“Commodity exchanges built on Binkabi platform also benefit from a global liquidity pool: an ever-growing group of commodity buyers and sellers and third-party service providers such as banks, insurers, logistics companies, quality inspectors, warehouse providers,” founder Quan Le said in an interview with ITWeb Africa.

He added that the platform has been launched to combat issues faced by countries like Nigeria in their ability to trade due to the lack of US dollars, while at farm level high yield and production output were not the guarantee of prosperity.

Events

The Finance Indaba, Johannesburg

Africa’s biggest finance conference and expo – the Finance Indaba – is coming up next month.

Hosted in Johannesburg on 3 and 4 October 2018 the conference lineup includes talks by various senior executives of prominent established financial institutions and promising startups.