About reputation Mothobi Seseli Chief Executive Officer Argon Asset Management 06 th November 2015
Asset management universe An African investment firm with global standards Bataung Capital
Apr-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec 12 Dec 13 Dec-14 Sep-15 Business What qualifies overview me to speak about this subject Increasingly a trusted provider AUM ZAR30 billion, across 43 institutional client mandates at 30 th September 2015 We have grown the business and AUM (assets under management) organically from zero since April 2005. SA Multi Asset Class 10% Global 5% Retirement funds Client type 80,8% SA Fixed Income 7% SA Equities 78% Insurers Medical schemes Multi managers Unit Trusts 10,9% 4,6% 3,3% 0,4% 30 20 10 0 0,0 1,4 4,1 4,5 7,0 AUM Growth R'bn 10,6 10,7 11,4 0% 20% 40% 60% 80% 100% 15,8 22,1 30 3
Our values govern our business Business inception date April 2005 FAIS license number FSP 835 Auditors Professional indemnity cover Portfolio administration GIPS Shareholding Our products KPMG Underwritten by Santam Outsourced to Maitland Fund Services Compliant and externally verified 100% black owner managed Domestic Equity, Bond, Absolute Return, Flexible Income & Money Market Global Equities, Fixed Income, Balanced/Multi Asset Class Our values drive all our decisions Honesty, integrity, thoroughness, accountability, respect for self & others and a solid work ethic 4
Client relevance displayed - Global recognition The European Global Banking & Finance Review Award: Best Asset Management Company, AFRICA 2014 http://www.the-european.eu/story-9155/interview-mr-mothobi-seseli-ceo-argon-asset-management.html Global Banking & Finance Review Award: Best Asset Manager, South Africa 2014 and 2015 http://www.globalbankingandfinance.com/global-banking-finance-review-awards-2015/ World Finance Award: Best Investment Management Company, South Africa 2014 and 2015 https://www.youtube.com/watch?v=wcdb4qawsl8&feature=youtu.be IAIR Award: IAIR Excellence in Asset Management Corporate Social Investment AFRICA 2014 http://www.iaireview.org/iair-awards-2014-winners-european-edition-548.html Award: Best Asset Management Company in AFRICA 2015 Global Brands Magazine Award: Best Asset Management Brand, South Africa 2015 http://www.globalbrandsmagazine.com/award-winners-2015/ Our website, www.argonassetmanagement.co.za (Was chosen as one of the best designed asset management websites globally, 2013) www.kurtosys.com/blog/19bestdesignedassetmanagementwebsites 5
Client relevance displayed - Domestic recognition Imbasa Yegolide Awards 2015 Nominated and shortlisted for the following awards: Equities Manager of the Year Absolute Returns Manager of the Year Bond Manager of the Year Overall Investment / Asset Manager of the Year Award: Best Absolute Returns Manager 2015 Association of Black Securities and Investment Professionals (ABSIP) in 2015 Award: Best Company with Global Significance 2015 Award: Traditional Equity / Fund Manager of the Year 2015 Awards were presented on the 01 st October 2015 in Johannesburg 6
Product excellence Strong performance to 31 st August 2015 25% 20% 15% 10% 5% Argon SA Equity Fund 10% 8% 6% 4% 2% Argon SA Bond Fund 0% 1 year 2 years 3 years 5 years Portfolio 9,94% 19,93% 20,28% 18,46% Benchmark (SWIX) 4,55% 15,52% 17,02% 17,89% Excess 5,40% 4,42% 3,26% 0,57% 0% 1 year 2 years 3 years 5 years Portfolio 6,72% 9,61% 7,36% 8,67% Benchmark (ALBI) 5,39% 8,51% 5,65% 7,85% Excess 1,33% 1,10% 1,71% 0,82% 8% 6% 4% 2% Argon Enhanced Money Market Fund 15% 10% 5% Argon Absolute Return Fund 0% 1 year 2 years 3 years 5 years Portfolio 6,98% 6,49% 6,25% 6,34% Benchmark (STeFI) 6,35% 5,95% 5,70% 5,75% Excess 0,63% 0,53% 0,55% 0,59% 0% 1 year 2 years 3 years 5 years Portfolio 10,18% 13,05% 11,71% 11,63% Benchmark (CPI+4%) 9,91% 10,30% 10,42% 10,00% Excess 0,26% 2,75% 1,29% 1,63% 7
Product performance - survey rankings Argon SA Bond Fund 1 Year to 31 August 2015 3 Years to 31 August 2015 Futuregrowth Yield Enhanced Investec Corporate Bond Composite Argon SA Bond Fund Investec Triple Alpha Coronation Strategic Bond Composite Atlantic Bond Composite Investment Solutions Pure Fixed Momentum AM Bond Fund Cadiz Houseview Bond Fund Pan Africa AM Segregated Domestic Bond Prescient Bond QuantPlus 8,29% 7,82% 6,72% 6,55% 6,50% 6,47% 6,44% 6,14% 6,12% 5,93% 5,88% Futuregrowth Yield Enhanced Argon SA Bond Fund Coronation Strategic Bond Composite Coronation Active Bond Portfolio Investment Solutions Pure Fixed Futuregrowth Core Bond Composite Investec Corporate Bond Composite Prescient Bond QuantPlus Cadiz Houseview Bond Fund Momentum AM Bond Fund 8,54% 7,38% 7,30% 6,94% 6,87% 6,55% 6,49% 6,48% 6,40% 6,38% Absa Asset Management Bond Fund Futuregrowth Core Bond Composite Stanlib Core Bond Portfolio Coronation Active Bond Portfolio Prudential Yield Enhanced Portfolio Momentum MoM Moderate Bond FOF SIM Institutional Total Return Bond Fund Prescient Bond Quant JM BUSHA BondPlus All Bond Index Vunani Active Bond Fund 5,84% 5,82% 5,81% 5,80% 5,60% 5,54% 5,51% 5,45% 5,41% 5,39% 4,99% Pan Africa AM Segregated Domestic Bond SIM Institutional Total Return Bond Fund Stanlib Core Bond Portfolio Momentum MoM Moderate Bond FOF Prudential Yield Enhanced Portfolio Vunani Active Bond Fund Prescient Bond Quant Investec Triple Alpha JM BUSHA BondPlus All Bond Index 6,36% 6,33% 6,24% 6,23% 6,18% 6,15% 6,13% 6,13% 5,76% 5,65% 0% 5% 10% Source: Alexander Forbes SA Bond Manager Watch Survey, August 2015 0% 5% 10% 8
Product performance - survey rankings Argon Absolute Return Fund Argon CPI +4% Sanlam Absa +4% Momentum Solutions Cadiz Mergence Omigsa CPI +4% 1 Year to 31 August 2015 2,46% 4,63% 4,56% 6,09% 5,65% 7,28% 8,20% 10,18% 9,91% 0% 4% 8% 12% Argon Sanlam CPI +4% Absa+4% Solutions Momentum Cadiz Omigsa CPI +4% 3 Years to 31 August 2015 8,21% 8,18% 8,11% 9,89% 9,61% 9,15% 10,08% 11,74% 0% 5% 10% 15% Source: Alexander Forbes Absolute Return Manager Watch Survey, August 2015 9
Product performance - survey rankings Argon SA Equity Fund (Non-Benchmark Cognisant) 1 Year to 31 August 2015 Non-Benchmark Cognisant 3 Years to 31 August 2015 Non-Benchmark Cognisant Investec Equity Sygnia Absolute Focus Equity Fund Argon SA Equity Fund OMIG Managed Volatility Capability Abax Equity Fund Foord Domestic Equity OMIG Premium Equity Momentum AM Core Equity Fund Prudential Deep Value Equity Coronation Houseview Equity Allan Gray FTSE/JSE All Share Index Stanlib Value Fund Old Mutual Multi-Managers Equity Portfolio ELECTUS Multi-Cap Portfolio ABSA Asset Management Value SIM Aggressive Equity Citadel Domestic Equity Composite SIM Unconstrained Equity Coronation Aggressive Equity Stanlib Unconstrained Equity Cannon All Equities SWIX Portfolio Oasis Specialist Domestic Cannon All Equities ALSI Portfolio Element Equity Investec Value -0,42% -1,10% -1,92% -2,37% -3,92% -5,80% -6,09% -7,07% -8,77% -17,80% -21,55% 17,39% 12,19% 9,94% 9,46% 7,93% 7,16% 5,60% 5,08% 4,74% 2,56% 1,30% 1,12% 0,78% 0,73% 0,12% -35% -20% -5% 10% 25% Investec Equity Argon SA Equity Fund Sygnia Absolute Focus Equity Fund Foord Domestic Equity Coronation Houseview Equity Prudential Deep Value Equity OMIG Premium Equity Allan Gray OMIG Managed Volatility Capability Momentum AM Core Equity Fund SIM Aggressive Equity Coronation Aggressive Equity FTSE/JSE All Share Index ELECTUS Multi-Cap Portfolio Old Mutual Multi-Managers Equity ABSA Asset Management Value SIM Unconstrained Equity Citadel Domestic Equity Composite Oasis Specialist Domestic Stanlib Unconstrained Equity Stanlib Value Fund Cannon All Equities SWIX Portfolio Cannon All Equities ALSI Portfolio Investec Value Element Equity 1,83% 0,03% 20,80% 20,28% 19,67% 19,62% 19,48% 18,90% 16,76% 16,44% 16,41% 16,00% 15,85% 15,81% 15,64% 15,01% 14,56% 13,82% 13,40% 11,96% 11,82% 10,71% 10,14% 6,71% 5,87% 0% 5% 10% 15% 20% 25% Source: Alexander Forbes SA Equity Manager Watch Survey, August 2015 10
Product performance - survey rankings Argon SA Equity Fund (Benchmark Cognisant) 1 Year to 31 August 2015 Benchmark Cognisant 3 Years to 31 August 2015 Benchmark Cognisant OMIG Managed Alpha Equity Fairtree Capital Equity Fund Argon SA Equity Fund Old Mutual Equities OMIG Double Alpha Top 40 Mergence SWIX Fund Absa Asset Management Large Cap Vunani Core Equity Fund Prudential Core Equity SWIX Aeon Active Equity Fund SIM Moderate Equity Prescient Equity Active Quant Momentum MoM Classic Equity Mergence CAPI Fund Sygnia Core Equity Fund Stanlib Research Prudential Core Equity ALSI Coronation Core Equity FTSE/JSE All Share Index Stanlib Core Equity Investment Solutions Pure Equity Investment Solutions Entrepreneur Equity Afena Capital Equity SWIX Taquanta Active SWIX Afena Capital Equity CAPI Kagiso Managed Equity Fund Taquanta Active All Share -0,01% -1,10% -3,19% -4,73% -6,32% -7,89% -8,82% 13,24% 12,37% 9,94% 8,82% 6,83% 6,73% 6,32% 6,15% 5,69% 5,67% 3,69% 3,67% 3,57% 3,51% 3,05% 2,38% 1,61% 1,28% 1,12% 0,47% -15% -10% -5% 0% 5% 10% 15% 20% OMIG Managed Alpha Equity Old Mutual Equities Argon SA Equity Fund Prudential Core Equity SWIX Mergence SWIX Fund Aeon Active Equity Fund OMIG Double Alpha Top 40 SIM Moderate Equity Coronation Core Equity Prudential Core Equity ALSI Mergence CAPI Fund Sygnia Core Equity Fund Momentum MoM Classic Equity Stanlib Research Vunani Core Equity Fund FTSE/JSE All Share Index Prescient Equity Active Quant Investment Solutions Pure Equity Investment Solutions Entrepreneur Equity Stanlib Core Equity Afena Capital Equity SWIX Kagiso Managed Equity Fund Taquanta Active SWIX Afena Capital Equity CAPI Taquanta Active All Share 21,60% 20,50% 20,28% 19,64% 19,40% 19,35% 19,17% 18,86% 18,56% 17,76% 17,52% 17,45% 17,36% 17,10% 16,37% 15,64% 15,34% 15,11% 14,00% 13,63% 12,82% 12,30% 10,99% 10,79% 9,31% 0% 5% 10% 15% 20% 25% Source: Alexander Forbes SA Equity Manager Watch Survey, August 2015 11
Business overview People development & support People development & support We recognize the value of our intellectual capital We are serious about maintaining a high performance culture, which is values based We are serious about supporting our people to deliver to their best level We are serious about delivering client value add To this end, over four years ago we implemented a people support and coaching programme that supports both individual and team development. Mr. Hugh Sundelson Member of the Institute of Stockbrokers South Africa MA (Professional Development / Coaching) Middlesex University, UK Ph D (Organisational Systems Theory) candidate, Middlesex University, UK Hugh is an Executive Coach and Change Consultant who works with large companies and multi nationals in many industries such as Old Mutual, Investec Bank, Rand Merchant Bank, Santam, Teljoy, Metropolitan Life, Safmarine, Vodacom and Oracle, specialising in the areas of change consulting and executive coaching. He has over 15 years experience in consulting, research, facilitation, performance management and people development in South Africa and internationally. Hugh is a qualified stockbroker and member of the Institute of Stockbrokers South Africa. He was formerly an executive partner of a successful stockbroking firm for 12 years. 12
What have the challenges been? Limited product track record Consultant endorsement Market resistance / inertia new company Poor brand awareness / reputation Lack of large financial resources relative to established competitors Very hands off approach in most quarters - GT Ferreira s story Stereotyping - what do you know about money management Size of opportunities tend to be smaller Mistrust Relationships & networks
What is trust? Relationship of reliance (Source: Wikipedia) Complete confidence in a person or plan; be confident about something, certainty based on past experience, to show confidence in a person by entrusting (him) with something. Assured anticipation; dependence upon something future or contingent, as if present or actual; hope; belief, Assured resting of the mind on the integrity, veracity, justice, friendship, or other sound principle, of another person; confidence; reliance; (Source: Arc dictionary free online dictionary)
Who can we trust? or who do we trust? Who do we develop easier functional trust based relationships with? Those similar to us, generally Those we know well maybe family & friends Those we share something in common with e.g. grew up together RSA (perhaps unique) - from overseas the developed world, for e.g. USA, UK Well developed brands Is this always the case? Maybe? Do these always serve you well? Or not? e.g. Tannenbaum scandal
What about reputation? In today s world perception is reality Fund managers can no longer rely on we build it and they will come ; there is a need to be more customer-driven Third party distribution also suggests the importance of branding to both distributors and end-users. Actual Return Perceived 1999 Performance* Performance** Net Sales Janus #1 #1 $36 Bln Fidelity #35 #2 $14 Bln The Vanguard Group #37 #3 $14 Bln Blackrock #8 #48 $ 0.005 Bln * 1999 total return for a representative sample of the company s funds, as measure against other funds with similar strategies, using asset - weighted figures ** Based on survey of 4,700 U.S. households conducted by Financial Research Corporation and Market Facts, Inc. The gap between awareness and reputation causes brands to be weak!
But does trust matter? Source: Edelman Trust Barometer
How are we developing our reputation / trust? 1) Build brand awareness Embracing media - radio / print examples 2) Living your values - turned client business opportunity down & this has become my fiercest supporter to date 3) Community responsibility - critical; empathy 4) Presence at industry fora - interact with decision makers, build a reputation and seek to influence perception because this is key 5) Building a network Socials and professional gatherings & with different stakeholders Work at creating enough shared experiences to inform otherwise; 6) Regular communication 7) People development 8) Product excellence
Building trust (contd) Trust is multi dimensional, which dimension do you focus on? What are the critical issues in building trust? (Source: M Pirson & D. Malhotra, unconventional insights for managing stakeholder trust, 2008 Harvard Business School working paper) 1) express genuine concern for your well-being 2) you are trusted because of competence (managerial effectiveness & technical competence) 3) value congruence 4) perceived as having integrity 5) transparency
More about reputation what impacts on it? Source: Edelman Trust Barometer
How do you build trust Edelman Trust Barometer reveals 16 specific attributes which build trust, and these can be grouped into five performance clusters, listed in order of importance. Engagement listens to customer needs and feedback treats employees well places customers ahead of profits communicates frequently and honestly on the state of its business Integrity has ethical business practices takes responsible actions to address an issue or crisis has transparent and open business practices Products and services offers high quality products or services is an innovator of new products, services or ideas. Purpose works to protect and improve the environment addresses society s needs in its everyday business creates programs that positively impact the local community partners with ngos, govt and 2rd parties to address societal needs Operations has highly regarded and widely admired top leadership ranks on a global list of companies delivers financial returns to investors
In concluding.. 1) How does business take these lessons forward? question our views and their underpins more, seek to challenge those convenient truths we have / hold, sincerity in our engagements; better emotional intelligence 2) Ultimately the organizations that succeed are those that manage their stakeholders effectively and from positions that are compliant with their value systems. 3) Self mastery / comprehension is vital - be absolutely clear about you, your passions, your interests Recognize your limitations and work at them. Seek to develop your own unique value proposition which influences your competitive advantage. 4) Identify champions and trigger pullers - those that will champion your cause. 5) Your values are critical, they anchor you 6) Engage, create the shared experiences that hopefully derisk you and make you human