Sanlam and S&P Dow Jones in talks to develop an ‘Africa SWIX’
12 November 2013 | Investments | General | Riad Daniels, SMMI
Sanlam Multi Manager International (SMMI), in conjunction with S&P Dow Jones Indices, recently hosted a roundtable discussion to address the development of benchmarks in Africa. “This is an important step in creating appropriate measurement tools for investors across the African continent,” says Riad Daniels, portfolio manager at SMMI, a division of Sanlam Investments.
According to Daniels, the Sanlam Group has long recognised the investment potential of Africa and it is viewed by many as the next big investment opportunity. As a multi manager, SMMI is well positioned to bring managers together from across the industry and to provide a platform for discussion. "We see this as the first step toward establishing an ‘Africa SWIX’ – much in the way the JSE evolved from the ALSI to the CAPI to the now widely adopted SWIX,” says Daniels.
The roundtable talks centred on the development of representative benchmarks with the goal of attaining a standard for investors into Africa. "SMMI appreciates the importance of measuring an investment’s performance against an appropriate benchmark. The lack of a generally accepted benchmark could potentially deter foreign investors from investing in Africa. Developing a widely accepted and transparent benchmark would contribute to improving the image of Africa as an investment destination.”
As the largest index providers in the world with a large range of indices already available, S&P Dow Jones Indices was an appropriate partner to bring on board – especially in the light of their recently opened offices in Johannesburg.
Says Zack Bezuidenhoudt, S&P Dow Jones Indices’ head: South Africa and Sub-Saharan Africa: "With our existing range of African indices and broad coverage of African securities listed both on the continent as well as developed market exchanges, S&P Dow Jones Indices is excited to work with asset managers to create standard and custom indices for Africa and South Africa.”
The talks were attended by industry experts, fund managers, multi-managers and asset consultants. Valuable feedback was provided on the actual challenges facing asset managers when investing in Africa. The participants indicated that capital market benchmarks in Africa had developed sufficiently to determine an investable universe, which was a progression from the cash plus-targets typically adopted a decade ago.
"Investors are seeking fair and equitable measurement that resonates with the risk premium associated in investing in frontier markets. With this forum, we are bringing together both owners and users of Africa benchmarks, providing an invaluable feedback loop that will ultimately be beneficial to all investors seeking African exposure,” says Daniels.
S&P Dow Jones Indices has undertaken to include feedback from the forum in the further development of benchmarks and will continuously engage with participants during this process.
