Coronation delivers resilient half-year results against a challenging backdrop

24 May 2022

Cape Town, 24 May 2022: Long-term valuation-driven asset manager Coronation Fund Managers today announced its interim results for the six months to end-March 2022.

For the full results announcement, you can download the pdf here 

The start of 2022 has brought dramatic and rapid changes to the global political economy. Just as the world was returning to a semblance of post-pandemic normal, albeit at a disjointed pace, Russia invaded Ukraine in February, a month before the end of this reporting period. This radical act sent markets tumbling and saw existing geopolitical fault lines broaden. With inflation already soaring around the world due to supply chain bottlenecks and extremely loose developed market monetary policy, markets have now had to deal with the inflationary impact of Russian sanctions and curtailed exports of Ukrainian wheat and fertiliser. Energy and commodity prices have soared as a result, and have dramatically impacted global food supply, leading to fears of extended food insecurity, especially in the Middle East and North Africa, and other already fragile emerging economies.

Says CEO Anton Pillay, ‘Locally, economic fundamentals continued to improve at the beginning of the year. As a significant exporter of commodities, South Africa has been a beneficiary of the commodities supply constraint – which has offset the impact of the hike in oil prices.’

He went on to say that that this is a temporary situation, and that South Africa’s infrastructure challenges have meant that the country has not been able to capture the full benefits of this tailwind.

“It remains clear that in order to achieve sustainable economic growth, it is imperative that we execute the structural reforms necessary to avoid a return to a low-growth, high-inflation environment,” says Pillay.

Results in line with management expectations

Global markets were volatile as a result of the war in Ukraine, the threat of sticky inflation, rising supply chain constraints and, consequently, higher prices. For the six months ending 31 March 2022, the MSCI All Country World Index was up 1% (USD) and the MSCI Global Emerging Markets Index was down 8% (USD). Local markets fared far better, the FTSE/JSE All Share Index was up 20% (ZAR) on the back of improved terms of trade resulting from higher commodity prices.

With respect to Coronation’s half-year results, Pillay explains, “After a period of earning elevated levels of fund management fees, due to exceptional portfolio performance resulting from opportunities presented by the Covid-19 pandemic, earnings have started to normalise.

“This is in line with management’s expectations, and we anticipate ongoing market volatility given the impact of unfolding and unpredictable macro events. We remind shareholders that as a cyclical business, our earnings are linked to our active management, valuation-based portfolio positioning and market performance.”

While somewhat less than recent reporting periods, as well as estimates of the outflows being experienced by the South African savings pool, Coronation continued to experience net outflows representing 2% of average AUM. As a significant manager of South African assets, we expect Coronation’s flows to continue reflecting those of the broader savings industry and the prevailing economic conditions in which we operate. These are both likely to remain under pressure for some time to come.

For the period under review, average AUM increased by 8% to R646 billion (March 2021: R600 billion), while closing AUM was down 1% to R625 billion (March 2021: R634 billion). As an investment-led business, Coronation’s primary focus remains on growing the value of the client assets entrusted to us over the long term, rather than simply looking to grow their pool of assets under management. Total operating expenses decreased by 13% to R948 million, compared to R1 088 million for the six months ended 31 March 2021.Variable expenses responded to the reduction in revenue, highlighting the strength of the variable cost model, which we continue to expect to offer shareholder protection.

While variable costs decreased by 21%, fixed expenses were relatively contained, remaining flat year on year. It is worth noting that we operate in an environment where the ongoing need to invest in business operations makes it challenging to contain fixed costs below inflation. Key areas of focus that require ongoing investment include compliance, client reporting, information technology and information systems.

Investment in the business is consistent with Coronation’s promise of service excellence to its clients. With the increased risks of cybercrime and data breaches, it is becoming increasingly important for us to ensure world-class cyber security and data protection for all of its stakeholders. This means that Coronation is constantly striving to lead and innovate in its security and data management systems. The relaxing of lockdowns and resultant resumption of travel, marketing and advertising activities have also added to costs during the current period.

Fund management earnings per share (FMEPS) for the six months ended 31 March 2022 have decreased by 12% to 214.8 cents when compared to 244.0 cents in the prior corresponding period. FMEPS is used to measure operating financial performance, being profit for the period excluding the net mark-to-market impact of fair value gains and losses, and related foreign exchange, on investment securities held. Diluted and basic headline earnings per share decreased by 22% to 199.1 cents (March 2021: 255.8 cents).

Corporate citizenship

Coronation is a large independent asset manager and custodian of the savings of millions of South Africans, as well as several international retirement funds, endowments and family offices. This is a fiduciary responsibility that we take very seriously. With this in mind, we are an active corporate citizen that is committed to contributing to the health and prosperity of society and the South African economy.

Says Pillay, “Our usual CSI activities, through our education-focused flagship Capsule programme, several well-established not-for-profit organisations and employee initiatives, remain at the core of our social outreach programmes. We also continued with our hunger relief, education support and additional funding to the Solidarity Fund. Following the torrential rains and flooding that devastated the region, we have supported recovery and food relief efforts for the residents of KwaZulu-Natal via FoodForward SA and Gift of the Givers.”

Coronation is an active participant in industry and government-related engagements to find solutions to help mitigate the socioeconomic effects of lockdowns, low growth, high unemployment levels, ailing State-owned enterprises and set South Africa on the road to economic recovery.

Transformation and empowerment

Since Coronation opened its doors at the dawn of democracy in 1993, it has been active in the transformation of the financial services sector and South African society, empowering its employees and benefiting the communities in which we operate.

“We were proud to be recognised as a Level 1 B-BBEE contributor as per the Financial Sector Code scorecard. Diversity and inclusion are core aspects of our culture and values, and are key to our ability to deliver on our commitment to be responsible stewards of our clients’ assets. We continue to make a significant impact on industry transformation, as is evidenced by the R279 billion of AUM managed by black investment professionals.”

Through its recruitment process, black enterprise development and training initiatives, as well as its CSI programmes, Coronation will continue to promote and build a transformed financial services industry and an inclusive society.

As at 31 March 2022, of Coronation’s employees1, 50% are women; 61% are black, of whom 58% are black women; and, for the six months under review, 83% of new hires are black and 42% of new hires are women. Of the Board, 80% of the directors are black and 50% are women. Key senior leadership positions are occupied by black individuals, including the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Head of Institutional Business and Head of Fixed Interest. Further to this, Coronation is 29% black owned2.

When it comes to the pressing need to develop black investment talent, Pillay explains, “Our multi-counsellor approach helps to expose up-and-coming portfolio managers to the investment process.

“To enhance this, our Portfolio Manager Accelerator Programme (PMAP) focuses specifically on black and female investment talent and offers them the opportunity to manage money within a timeframe that is well ahead of the current industry standard. Launched in 2019, PMAP participants are backed and mentored by Coronation’s seasoned investment team and supported by the rigour of the Coronation investment process and high-end systems infrastructure.”


Coronation has been an active steward of its clients’ capital for almost 30 years and fully integrate environmental, social and governance considerations into all of the assets that they manage on their behalf. This includes active engagement, voting and shareholder activism.

“We will be releasing our fourth annual Stewardship Report in June this year, which will outline our stance on key issues, and highlight some of the engagements our investment team undertook during the course of the 2021 calendar year. We also continue to deepen our corporate operational stewardship with our carbon footprint reporting and mapping our business activities to the UN Sustainable Development Goals,” says Pillay.


The macroeconomic environment remains uncertain and unpredictable. The world is currently faced with an escalating conflict in Europe, with material and long-lasting global political and economic repercussions. Global central banks have shifted from their long held accommodative stance in order to contain rampant inflation, significantly changing the medium-term prospects for interest rates and the cost of capital. Capital markets have responded to this uncertainty through significant declines, with many key markets already in a technical bear market, which is defined as a decline of more than 20% from its peak.

Active investors

At an individual stock level, the moves have been even more extreme, with many global share prices down in excess of 50%. It is important to bear in mind that periods of intense volatility typically create the most fertile ground for significant value-creating investment opportunities.

“As active, long-term stock pickers, we are incredibly excited by the opportunities the market is presenting us, both locally and globally. This is reflected in our portfolios across all our strategies. As always, we remain focused on actively managing our clients’ portfolios to ensure we deliver superior long-term investment outcomes,” assures Pillay.

“After the prior period of exceptional portfolio performance, we do not expect to maintain the levels of performance fees earned.  We also continue to invest in our business and remain committed to playing our part as an active and responsible corporate citizen, especially given the current macroeconomic uncertainty,” he says.

*South Africa-based employees
**As per Financial Sector Code scorecard