Coronation focused on creating long-term value
15 November 2016 - Coronation Insights
- Revenue of R4.0 billion (-9%)
- Diluted headline earnings per share of 447.6 cents (-13.3%)
- Total dividend per share of 447 cents
- Assets under management of R599 billion (-1.8%)
Anton Pillay, Chief Executive Officer of Coronation Fund Managers, commented:
“The past year’s results are in line with management’s expectations. Amid heightened levels of volatility, our client portfolios produced encouraging performance as they continued to benefit from significant inflection points in emerging markets and commodities at the start of the calendar year.
As an active manager, volatile markets create opportunities to take positions that will ultimately deliver compelling returns for clients over meaningful periods of time. The recent performance of our funds is encouraging and gives us confidence for the years ahead.”
As a cyclical business, Coronation’s revenue stream is highly geared to the returns of the market and the level of outperformance it generates on behalf of clients. “The decline in our revenue and headline earnings is attributable to both lower levels of performance fees generated during the 12-month period when compared to the prior financial year, and the impact of implementing a new retail fee structure that will enhance outcomes for clients over the long term”, said Pillay.
Total net outflows of R79 billion for the year were largely offset by capital appreciation, taking Coronation’s assets under management (AUM) to just below R600 billion. Commented Pillay: “The key driver of our success is our ability to add value over the long term to the assets we manage on behalf of clients. Both our institutional and retail businesses remain acknowledged industry leaders in the South African market, while the long-term track records of our global portfolios continue to attract the attention of international investors.”
He adds: “As a truly South African business, transformation has long been a key strategic focus of Coronation. We continue to build on the meaningful and sustainable transformation achieved both in our business and through our contribution to the financial services industry”. Coronation is more than 20% black-owned (as measured in terms of the Financial Sector Charter). More than half of its employee complement in South Africa are black, of which more than 60% are female. “We are proud of our material and meaningful contribution to the black stockbroking community over the past decade by means of The Coronation Business Support Programme. The programme has inspired the creation of a broader industry programme, which is a collaboration between ASISA and six leading industry participants, of which we are one”, commented Pillay.
Coronation is a significant manager of institutional assets in South Africa. It manages assets for more than 80% of the top 200 retirement funds in the country, constituting a total market share of close to 15%. Its institutional client portfolios, both local and international, amount to R374 billion (September 2015: R387 billion).
“We operate in a net outflow market in the South African retirement space, which coupled with portfolio rebalancing, contributed to a total net outflow of R61 billion from our institutional business for the year. Furthermore, we remain closed to new investors in our top-performing SA Equity and Multi-Asset portfolios, a decision implemented more than four years ago to protect the future investment outcomes for our existing clients.”
Coronation is one of the country’s foremost managers of long-term assets in the collective investment schemes industry, with a market share of 13.1% (September 2015: 14.6%). “Following a sustained period of rapid growth and disproportionate allocation of industry flows, our retail fund range experienced net outflows of R18 billion during the year”, mentioned Pillay. Total retail assets under management are R225 billion at 30 September 2016 (September 2015: R222 billion).
A final gross dividend of 218 cents per share has been declared for the year. Together with the interim gross dividend of 229 cents per share, this amounts to a total gross dividend of 447 cents per share for the year.
The sustainability of our business is anchored in our relentless commitment to long-term investing. While the likelihood of continued near-term volatility and uncertainty persists, our robust investment philosophy and approach continue to act as a compass, which enables us to make the appropriate long-term decisions for the benefit of our clients. Our success in achieving this will generate long-term value for all stakeholders”, concluded Pillay.
Coronation Fund Managers
Anton Pillay 021 680 2000
Louise Pelser 021 680 2216
076 282 3995
Johannes van Niekerk 082 921 9110
Institutional Fund Performance
- Our flagship domestic equity portfolio, Houseview Equity, has produced an active return of 3% per annum (gross of fees) since its inception in 1993.
- The Coronation Global Emerging Markets Equity Strategy has generated an active return of 5.2% p.a. (gross of fees) since inception in July 2008;
- More than 95% of institutional portfolios have outperformed their respective benchmarks over the past 10 years;
- 100% of institutional portfolios have outperformed their benchmarks over the past 20 years; and
- More than 95% of clients who have been invested with Coronation for more than 10 years have outperformed their benchmarks since inception.
Retail Fund Performance
Coronation was named runner-up Raging Bull South African Management Company of the Year and runner-up Best Large Fund House at the 2016 Morningstar South Africa Awards.
Highlights across its domestic and international fund range are detailed below, reflecting 1st quartile rankings in their respective Morningstar categories:
For the third consecutive year, Coronation was named Raging Bull South African Management Company of the Year, and for the fifth consecutive year, Morningstar Best Large Fund House. As at 31 March 2015, all domestic and international flagship funds ranked in the 1st quartile of their respective Morningstar categories since launch (after the deduction of all fees). Highlights include:
- Coronation Top 20, a top-performing general equity fund, has outperformed its benchmark by 4.8% p.a. (net of fees) since inception in October 2000;
- Coronation Balanced Plus, the no. 1 balanced fund in South Africa since its launch in April 1996, has outperformed its average competitor by 2.5% p.a. (net of fees) over the total period;
- Coronation Capital Plus, the no. 1 multi-asset medium equity fund since its inception in July 2001, has outperformed inflation by 7.2% p.a. (net of fees) over the 15-year period;
- Coronation Balanced Defensive, a top-performing conservative fund, has outperformed inflation by 4.2% p.a. (net of fees) since its launch in February 2007;
- Coronation Strategic Income, the no. 1 multi-asset income fund since its launch in July 2001, has outperformed cash by, on average, 2.8% p.a. (net of fees) over this same period;
- Coronation Global Opportunities Equity [ZAR] Feeder, the no. 1 global equity general fund since its launch in August 1997, has outperformed the global equity market by 1.1% p.a. (net of fees) over the almost 20-year period;
- Coronation Global Managed [ZAR] Feeder, the no. 1 global multi-asset high equity fund in South Africa since its launch in October 2009, has outperformed its average competitor by 1.4% p.a. (net of fees) over this same period.
Key highlights include:
- Within the South African-focused investment team, three out of four leadership roles are held by black employees, while 43% of our senior portfolio managers are black;
- At executive committee level, black representation is 75%, while at board level the figure is 57%;
- The success of the Coronation Business Support Programme that has benefited nine black South African stockbroking companies over the past decade, has inspired the creation of a broader industry programme. This new initiative, launched on 1 August 2016, is a collaboration between the Association for Savings and Investment South Africa (Asisa) and six leading industry participants (sponsors), of which Coronation is one.
Any information being provided herein (the “Information”) is not designed for use in any jurisdiction or location where the publication or availability of the Information would be contrary to local law or regulation. If you have access to the Information it is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction and it is recommended an investor first obtain appropriate legal, tax, investment or other professional advice prior to acting upon the Information. Coronation Asset Management (Pty) Limited and Coronation Investment Management International (Pty) Limited are authorised Financial Services Providers regulated by the Financial Services Board of South Africa. Coronation Asset Management (Pty) Limited and Coronation Investment Management International (Pty) Limited are subsidiary companies of Coronation Fund Managers Ltd, a company incorporated in South Africa and listed on the JSE (ISIN: ZAE000047353). The Information is for information purposes only and does not constitute or form part of any offer to the public to issue or sell, or any solicitation of any offer to subscribe for or purchase an investment, nor shall it or the fact of its distribution form the basis of, or be relied upon in connection with, any contract for investment. Unit trusts should be considered a medium- to long-term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past performance is not necessarily an indication of future performance. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax, where applicable. Where foreign securities are included in a fund it may be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Coronation Management Company (RF) (Pty) Ltd is a Collective Investment Schemes Manager approved by the Financial Services Board in terms of the Collective Investment Schemes Control Act. Unit trusts are traded at ruling prices set on every trading day. Unit trusts are allowed to engage in scrip lending and borrowing. Coronation Fund Managers Limited is a Full member of the Association for Savings & Investment SA (ASISA).Opinions expressed in this document may be changed without notice at any time after publication. Nothing in this document shall constitute advice on the merits of buying and selling an investment.