Umbono Fund Managers reaches R50bn under management

Umbono Fund Managers, the black empowered asset management group focused o­n cost-effective index tracking, has reached a significant milestone, breaching the R50bn mark in April. As of 30 April, 2008, it had R50.3bn in assets under management, making it o­ne of South Africa’s largest asset managers.

Launched in 2001 and now part of Old Mutual Investment Group SA (OMIGSA), Umbono is the o­nly empowered asset manager in South Africa focused uniquely o­n index tracking solutions. Its success to date has made it the largest index tracking group o­n the African continent.

“While it is an important milestone for us as a company, it also marks a significant development in the South African asset management industry,” observes Umbono CEO Tendai Musikavanhu. “It gives us sufficient economies of scale that no other group yet has, allowing us to offer index tracking products at the lowest possible cost. It also therefore provides a sound platform for further expansion in the industry.”

Umbono is o­ne of South Africa’s very few asset managers founded by a black-controlled company (UC Capital) to have notched up such robust growth to date, he adds. “Back in 2002 we o­nly had R2bn in assets under management, but we had firm ambitions to grow to R100bn by 2012 – and we’re still o­n track to reach this target. Contributing to growth has been a mandate from Old Mutual to manage approximately R35bn in life funds o­n a tracker basis. o­n top of this is our exclusive mandate to offer an index tracker fund for the new FTSE/JSE RAFI 40® Index (a fundamental index), which has attracted over R320m in client funds since its launch in October last year.”

“Since the advent of FTSE/JSE indices like the SWIX (Shareholder Weighted Index), the case for using cost-effective index tracking funds as the ‘core’ of an investment portfolio has become even more compelling. For example, the SWIX over the last five years has comfortably outperformed more than 50% of the active managers in the local industry. Importantly, this is the benchmark chosen by most active managers,” Musikavanhu notes.