Performance through focus - Unveiling the Old Mutual Investment Group
In a move set to change the face of the asset management industry in SA, this week Old Mutual revolutionised its investment business, creating 12 performance-driven, autonomous investment businesses and establishing the Old Mutual Investment Group SA (OMIGSA).
OMIGSA CEO Thabo Dloti says this new multi-boutique investment business
combines the benefits of Old Mutual's global reach and strong supporting infrastructure with independent, specialist and focused investment businesses.
"The launch of OMIGSA marks our transition to a business with 12 nimble
and fiercely independent investment businesses, with one main aim: to
deliver great performance to clients."
Spanning all the key investment styles and asset classes, he says the 12 boutiques offer investors access to a comprehensive range of investment products, including both actively and passively managed funds, as well as conventional and alternative investments.
The new business encompasses all the investment businesses formerly
dispersed throughout the Old Mutual group, including Old Mutual Asset
Managers, Old Mutual Specialised Finance, Old Mutual Properties, Symmetry and recently acquired Marriott.
In December, the group also acquired a controlling stake in Umbono Fund
Managers- an investment business that offers index trackers and other
passively managed funds. Dloti says the plan is to build Umbono into the largest index manager in SA. "We have worked closely with Tendai
Musikavanhu and his Umbono team since inception. We are excited to have
them as part of our new investment business."
What's different about this new structure?
Boutique managers have been given the autonomy to take the critical
business and investment decisions that drive performance. They decide who to recruit, what products they will offer, the fees they will charge and the client mandates and benchmarks they will structure their investment process around. These are decisions that in large asset managers are typically taken by the executive team.
On the investment side, the boutiques no longer subscribe to a single house view. Each boutique builds their own portfolios, which allows them to invest with conviction as opposed to running with the herd and gives them the critical ability to react quickly to market information. They can also set capacity limits on how much business they are willing to take on, ensuring that the meet their performance promises to clients in the long term.
Dloti says the boutique structure also ensures that the focus and interests of the investment professionals are completely aligned with those of their clients through a combination of a profit share in their boutique businesses and investing their capital alongside that of their clients in the funds they manage. "With their remuneration largely determined by the performance they deliver, the investment managers only do well when the clients do well."
"The result is a culture that is conducive to innovation and accountability- a culture that forms the bedrock for new ideas and a drive to deliver to clients".
Supported by in-depth research
The boutiques will continue to have access to the cutting edge investment analysis offered by one of the largest research teams in the country. This gives them a competitive advantage over other boutique businesses in the market who cannot afford similar depth of resources. Peter Linley, who has 20 years investing experience, is head of Investment Research and Steve Minnaar head of equity research. Says Linley: "Steve is extremely well positioned to take on the responsibility, having covered a large number of shares during his eight years experience in the industry." Other research teams include economics, quantitative research and credit analysis.
Free to focus on investing
Investment boutiques have immediate access to the operational
infrastructure of the Old Mutual group, enabling them to focus on what they do best- investing and, in so doing, delivering performance. These support services include sales and marketing, IT, finance, compliance, human resources and financial management.
Thus, with access to these world class resources, clients who invest with any of the boutiques within OMIGSA have the reassurance that they are investing with an established brand that has a strong infrastructure and an excellent record for governance and risk management. These significant resources also offer cost benefits through their economies of scale.
A Natural Progression
The inception of the Old Mutual Investment Group marks a substantial
restructuring of the investment businesses in Old Mutual to bring its
businesses in line with the changing success factors in the investment world.
"Old Mutual plc has considerable experience in creating boutique structures as is evidenced by its achievements in the US and the UK," says Old Mutual South Africa MD, Paul Hanratty. "Creating the Old Mutual Investment Group was a natural progression in a journey that the Old Mutual group had embarked upon internationally during the last few years. In the US, most notably, the group acquired United Asset Management Corp. for $1.6bn in 2000 and turned it into a business with $237.3bn funds under management as at 30 Sept 2006, and delivering excellent performance to clients. It did this by working with specialist investment boutiques to provide the scale benefits of Old Mutual's substantial supporting infrastructure, yet allowing significant business autonomy."
He says that after recognising the success of the boutique model abroad, OMAM (SA) started running specialist investment capabilities in-house. "It has continued doing so for more than three years, building up remarkable capacity and performance track records in the process.
"We firmly believe that the Old Mutual Investment Group is well positioned to face the challenges of the new investment environment head on."
