Sanlam Investments acquires remaining stake in Satrix Managers

Sanlam Investment Holdings Ltd (SI), a wholly owned subsidiary of Sanlam Limited and part of the cluster of investment businesses in the listed Sanlam group, has concluded an agreement* to acquire the remaining 50% shareholding in Satrix Managers Pty Ltd

Johan van der Merwe, CEO of SI, says the passive investment space is an increasingly important one. “According to a Blackrock report, the 2000 to 2010 compound annual growth rate for global ETF assets has been over 30%. This growth is mainly attributable to the fact that ETFs provide fast and efficient access to the financial markets, are liquid, transparent and cost-effective. South Africa has been a relatively late starter with assets growing from R0.25bn in 2000 to R17.5bn in 2008, but local demand is fast gathering steam.”

Van der Merwe said Satrix is synonymous with index tracking in South Africa and is the most sought-after brand in its segment, and he was therefore delighted to have it fully added to the SI stable to complement its strong active management capabilities. “We helped establish Satrix in 2001 as the first ETF in South Africa and it has been a true success story. It currently manages approximately R11.6bn of assets and boasts strong performance: Satrix DIVI fund has returned 74% over the past 3 years and Satrix RAFI which has done 70% over the same period (vs. the top 40 index which is at 52%).”

While ETFs were previously mainly seen as low-cost investment options for retail investors, the industry is fast evolving. “The development of newer smart beta and enhanced index funds make it possible to provide performance similar to conventional asset managers, while still maintaining a low cost. As a result, we have seen an increase in interest for these products from institutional investors and multi managers, and the market has rapidly grown since 2008 to approximately R35bn today,” said Van der Merwe.

SI has taken a leading role in developing smart beta products and already boasts strong capabilities in this space. “Sanlam Investment Management’s sim.smartcore unit, run by Helena Conradie, focuses on providing both index tracking and smart core products and services to the market. At the end of 2011 sim.smartcore managed in excess of R20bn of assets.

Over the next few months we’ll focus on developing synergies between sim.smartcore and Satrix in order to grow the unit in the leading index tracking business in SA.”

Van der Merwe said that there was still a place for both active and passive fund management in the industry. “There are a massive range of needs among retail and institutional investors some better fulfilled by active and others by passive products. The developments in index tracking have added diversity and competition to the space which is exciting.”