Coronation remains singularly focused on creating long-term value
19 May 2015 - Coronation Insights
- Assets under management of R636 billion
- Diluted headline earnings per share of 246.7 cents
- Interim dividend per share of 246 cents
Leading independent long-term manager Coronation Fund Managers (Coronation) today announced interim results for the six months to 31 March 2015.
Over the period, developed markets once again outperformed emerging markets (3.6% for the MSCI World Index versus -2.3% for the MSCI Emerging Markets Index, both in US dollar terms), while the FTSE/JSE All Share Index returned 7.3% (down 0.3% in US dollar terms). The rand continued its decline against the US dollar to close the period 7.1% lower at R12.13, but appreciated by 8.4% against the euro to close at R13.14.
Anton Pillay, CEO of Coronation commented: “We delivered a good set of results that are in line with management expectations. Following an extended period of extraordinary growth, funds under management continued to increase, recording an 8% rise to R636 billion. This was supported by international and retail flows and a strong, albeit volatile, market environment.”
As a long-term manager, the success of Coronation’s philosophy and process is best illustrated by the track record of their longest-running domestic equity fund, Houseview Equity, which has outperformed the market by 3% p.a. since inception in 1993.
Over the period Coronation’s institutional business, which focuses on both local and international clients, recorded total net outflows of R0.56 billion. Its international offering attracted net inflows of R10.28 billion, largely into their emerging market product. Net outflows in the South African portion of the business relate to the relative maturity of the domestic retirement fund industry and the closure of the Coronation SA Equity and Multi-Asset funds to new institutional clients.
Coronation remains the largest manager of long-term retail assets in the South African collective investment schemes industry with a market share of 15.2% (September 2014: 15.1%). Although industry inflows plateaued over the six-month period, Coronation continued to attract a significant portion of available flows, recording net inflows of R8.01 billion.
During the period, Coronation added to its international offering to both retail and institutional clients with the inclusion of specialist global equity portfolios.
As part of their regular fund review, Pillay added that Coronation is in the process of reviewing the fee structures and investment mandates across its retail fund range. “The outcome of this review will result in a simplification and or reduction in fees for certain funds. We expect to communicate these changes to our retail clients in the coming months.”
Coronation continues to reward shareholders through regular and significant distributions of free cash flow generated. The company endeavours to distribute at least 75% of after-tax cash profit. Accounting for projected cash requirements, a gross dividend for the interim period ended 31 March 2015 of 246 cents per share has been declared, resulting in a net dividend of 209.1 cents per share for shareholders subject to dividends tax.
Anton Pillay concluded: “These results serve as a reminder that the earnings stream of a fund manager is cyclical and volatile. Notwithstanding the fact that the long-term investment performance across our fund range remains excellent, we have cautioned shareholders for some time that the elevated levels of markets as well as volatility in short-term outperformance can have a significant impact on the earnings of our company. As long-term investors, our primary focus is on creating long-term value for our clients. If we are successful in doing this, then all stakeholders in our business will share in that success.”
Coronation Fund Managers
Anton Pillay 021 680 2000
Louise Pelser 021 680 2216
076 282 3995
Johannes van Niekerk 082 921 9110
The long-term outperformance across Coronation’s institutional funds remains compelling, examples of which include:
The longest-running domestic equity fund, Houseview Equity, has delivered annualised alpha of 3% (gross of fees) since inception in October 1993.
Global Absolute, the first-to-market absolute portfolio, has produced alpha of 5.2% p.a. (gross of fees) since inception in August 1999.
The specialist bond portfolio, Strategic Bond, has outperformed the local bond market by 1.7% p.a. (gross of fees) since inception in January 2008.
The global balanced portfolios ranked in the 1st quartile over 5 and 10 years in the Alexander Forbes Global Large Manager Watch™ survey to end March 2015, and our domestic balanced portfolios were in the 1st quartile over 5 years and 2nd quartile over 10 years in the SA Large Manager Watch™ survey.
The Coronation Global Emerging Market Fund has generated an annualised alpha of 5.5% (gross of fees) since inception in July 2008.
The specialist African equity portfolio, Africa Frontiers, has outperformed its benchmark by 8.8% p.a. (gross of fees) since inception in October 2008.
In November 2014, the Coronation Active Global Equity and Coronation Global Frontiers funds were added to the international fund range to institutional clients.
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, the no.1 general equity fund since launch in October 2000, has outperformed its benchmark by 5.4% p.a. (net of fees) over the same period.
Coronation Balanced Plus, the no.1 balanced fund since launch in April 1996, has outperformed its average competitor by 2.7% p.a. (net of fees) over the same period.
Coronation Capital Plus, the no.1 multi-asset medium equity fund since inception in July 2001, has outperformed inflation by 8.2% p.a. (net of fees) over the same period.
Coronation Balanced Defensive, a top performing conservative fund, has outperformed inflation by 4.9% p.a. (net of fees) since inception in March 2007.
Coronation Strategic Income, the no.1 multi-asset income fund since inception in July 2001, has outperformed cash on average by 2.9% p.a. (net of fees) over the same period.
Coronation Global Managed [ZAR] Feeder, the no.1 global multi-asset high equity fund in South Africa since launch in October 2009, has outperformed its composite benchmark by 1.6% p.a. (net of fees) over the same period.
During the period the Coronation Global Equity Select [USD] and Coronation Global Equity Select [ZAR] Feeder funds were added to the international offering to retail clients.
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 is an authorised Financial Services Provider regulated by the Financial Services Board of South Africa. Coronation Asset Management (Pty) Limited is a subsidiary company of Coronation Fund Managers Limited, 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 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.