Crisis management now sets asset managers apart – Absa

Crisis management – specifically, the proven ability to ride out the 2008 global financial crisis – is becoming the new yardstick for asset manager selection in the highly competitive institutional investment sector. How your investment philosophy held

“The crisis crystallised key distinctions; particularly that between ‘traders’ who seek tactical opportunity and ‘investors’ who make strategic allocations and commit to the long term,” notes Jiya.

“Five years is regarded in the investment industry as a meaningful timeframe across which to measure performance and management of risk and volatility.

“Our message to pension funds focuses on our record for managing volatility and achieving results against our mandate. The message from institutions is ‘OK, let’s see how your approach held up in the aftermath of the GFC’.

“In view of the upcoming fifth anniversary, this is fast becoming the quick and easy method of weighing your credentials.”

Scrutiny is most searching across multiple asset class mandates as performance tends to reflect the validity of a manager’s strategic assessment two or three years down the line.

“A highly specific objective against inflation is particularly relevant,” says Jiya, “as ordinary retirement fund members have a good grasp of the inflation yardstick.”

The Absa Absolute Fund with a mandate to deliver long-term returns of inflation plus 4% has become a key reference point in the post-GFC era.

Jiya adds: “Through the financial market crisis starting in 2008, the fund continued its upward trend. Over the longer term it is above the CPI + 4% benchmark.

“It underperformed its benchmark for only a short period and the margin of underperformance was low.

“The record supports our positioning as pragmatic value investment managers who are not distracted by marketplace noise.”

One of the long-term results of the crisis was the snapshot it had created into those who remained true to their investment philosophy and methodology.

“The crisis was challenging at the time and considerable wealth was depleted, but it performed a valuable function by differentiating the serious investors from the rest,” notes Jiya.

“We’re positioned as wealth accumulators, not speculators. That positioning holds us in good stead even five years after the event.”