Coronation delivers credible results for the year
21 November 2017 - Coronation Insights
- Assets under management (AuM) of R614 billion
- Diluted headline earnings per share 437.5 cents
- Total dividend per share of 437.0 cents
Cape Town, 21 November 2017 – Leading independent long-term asset manager Coronation Fund Managers (Coronation) today announced annual results for the 12 months to 30 September 2017.
Anton Pillay, Coronation CEO, commented: “We delivered credible results in line with management expectations. Our entire range of client portfolios performed very well against a backdrop of strong market gains worldwide.” For the 12 months, the MSCI All Country World Index delivered a return of 18.7% and the MSCI Emerging Markets Index added 22.5% (both in US dollar terms), while the FTSE/JSE All Share Index gained 10.2% (in rand terms).
As a cyclical business, Coronation’s revenue stream is highly geared to both the returns of the market and the level of outperformance it generates on behalf of clients across its fund range.
While total AuM rose by 2.5% for the full year, average AUM declined by 3.5% over the period, contributing to the decline in revenue of 3.1% to R3.9 billion. The impact of the decline in revenue on profits was dampened by the variable cost nature of Coronation’s business model. Pillay explained: “Although certain once-off fixed expenses relating to our retail client reporting and correspondence system, as well as to our outsourced fund administration function, were incurred during the year under review, the decrease in variable expenses resulted in an overall decline of 4.2% in total expenses. The combined effect of these factors was a 2.3% decline in diluted headline earnings per share to 437.5 cents.”
Pillay commented: “Coronation has achieved industry-leading transformation in all areas of our business.” Within Coronation’s South African-focused investment team, three out of the four leadership roles are held by black employees, while 43% of portfolio managers are black. Coronation is 22.9% black owned (as measured by the Financial Sector Charter).
Coronation’s institutional and retail businesses are acknowledged as industry leaders in the South African market. “Our homegrown expertise in managing money in global markets has been recognised by an increasing number of international allocators of capital, and our global franchise has developed into a compelling business in its own right. Growing this franchise will be a key focus area in the years ahead.”
Coronation’s institutional business manages assets for both South African and international investors, totalling R376 billion (September 2016: R374 billion)
As a significant participant in the local institutional market, Coronation invests assets on behalf of a substantial portion of domestic retirement funds. Its local institutional AuM totals R305 billion (September 2016: R323 billion), which represents a meaningful share of the market.
The local pension fund industry continues to see structural net outflows, which have been exacerbated by the poor economic conditions. “Notwithstanding this backdrop, we are encouraged by the sharp slowdown in net outflows to R43.7 billion over the period compared to R58.1 billion recorded in the prior financial year. Our business is well positioned to take advantage of industry shifts and we expect to see a positive impact on flows from our reopened strategies,” said Pillay. Coronation reopened its top-performing SA Equity and Multi-Asset portfolios (which have been closed for nearly five years) to new investors in March 2017.
“We continue to lead the market in many areas, including in making bold new changes to our hedge funds fees, which is a global first. Further, we offer a complete and easily understandable range of solutions that has consistently delivered market-beating performance for our investors over the long term.”
Coronation currently manages a combined total of R71 billion (September 2016: R51 billion) in our global strategies on behalf of a number of leading international retirement funds, endowments and family offices. “In the more than nine years since the launch of our global franchise, we have made great strides in establishing a world-class track record across our entire product range.”
Pillay adds that Coronation’s expertise and perspective in managing money from an emerging market resonate well with many investors globally. This has resulted in net inflows of R7.4 billion into these strategies (14.5% of the opening AuM invested in our global strategies) during the period.
Coronation remains one of the country's foremost managers of long-term assets in the collective investment schemes industry. “Poor sentiment and challenging conditions in the local economy contributed to subdued net inflows at industry level, which were significantly below the average achieved since the global financial crisis. Against this backdrop, we experienced reduced net outflows of R6.9 billion,” explained Pillay. Coronation’s retail AuM rose to R238 billion (September 2016: R225 billion).
Over the last few years, Coronation has standardised and simplified fees across its retail fund range, most recently by adopting the same fee across its multi-asset funds regardless of risk budget. Further, given the scale benefits achieved in Coronation’s growing international business, the manager was also able to lower the fund management and administration charges in their global funds. “We continuously review fees as market conditions and client preferences change. The recent changes will continue to benefit clients through enhanced investment outcomes, and shareholders through contributing to the sustainability of our market position,” said Pillay.
“Our business remains anchored in our relentless commitment to the long term and the delivery of compelling investment returns for our clients. Coronation’s prospects appear sound. Net flows have normalised over the past year; we are yet to see the flow impact of our re-opened South African institutional strategies and our global franchise continues to show strong prospects across a wider range of products,” commented Pillay.
He noted that Coronation’s long-term investment track record has been bolstered by contrarian views, which have been vindicated over the past two years. “While continued near-term volatility and uncertainty may persist, our robust investment approach enables us to make appropriate long-term decisions for the benefit of our clients. We believe that our success in achieving this will ensure long-term value for all stakeholders,” Pillay concluded.
|Anton Pillay (Coronation Fund Managers)||021 680 2000|
Analyst & investor relations enquiries:
|Johannes van Niekerk (Capital Voice)||082 921 9110|
|Louise Pelser||076 282 3995|
Notes to the editor:
Performance highlights across our SA and Global Institutional as well as Retail product ranges
Since our inception in 1993, we have built a track record of producing significant market-beating returns over meaningful time periods – an achievement very few fund managers can lay claim to. Of our institutional and retail assets, 98.9% has outperformed their respective benchmarks since inception.
A large number of our institutional investors have been invested with us for more than a decade and we are proud of the investment returns they have achieved.
Within our South African specialist equity strategies:
- Coronation Houseview Equity has produced a return of 17.5% p.a. since its inception in October 1993, thereby delivering an active return (alpha) of 2.7% p.a., while Coronation Aggressive Equity has produced a return of 18.0% p.a. since its launch in February 2002, delivering alpha of 2.7% p.a
Within our market-leading multi-asset strategies:
- Coronation Global Houseview has delivered 16.5% p.a. since its launch in October 1993, thereby representing a real return of 10.3% p.a., while Coronation Managed has produced 16.9% p.a. since its launch in May 1996, representing a real return of 11.0% p.a.
Within our South African specialist fixed income strategies:
- Coronation Strategic Bond has produced a return of 10.0% p.a. since its inception in January 2008, thereby outperforming the BEASSA All Bond Index by 1.5% p.a., while Coronation Active Bond has produced a return of 11.6% p.a. since its launch in July 2000, representing alpha of 0.9% p.a.
The long-term track records of our global portfolios are highly compelling:
- Coronation Global Emerging Markets Equity Strategy has produced a return of 8.5% p.a. (in US dollars) since its inception in July 2008, delivering alpha of 5.3% p.a.
- Coronation Africa Frontiers has delivered an absolute return of 9.3% p.a. (in US dollars) since its launch in October 2008, placing it at the top of its peer group globally.
- Coronation Global Equity Fund of Funds has produced a return of 6.7% p.a. (in US dollars) since its inception in July 2000, delivering alpha of 2.0% p.a.
- Coronation Global Managed Strategy has delivered a return of 9.3% p.a. (in US dollars) since its inception in November 2009, representing a real return of 7.6%.
All institutional performance returns are stated gross of fees.All institutional performance returns are stated gross of fees
Performance highlights across our domestic as well as international fund range are detailed below, which reflect consistent first-quartile rankings in their respective Morningstar categories since their respective inception dates:
- Coronation Top 20, a top-performing general equity fund, has outperformed its benchmark by 4.5% p.a. since its inception in October 2000, and by 3.1% p.a. over the past 10 years.
- Coronation Balanced Plus, the no. 1 balanced fund in South Africa since its launch in April 1996, has outperformed its average competitor by 2.4% p.a. and inflation by, on average, 8.8% p.a. over this period.
- Coronation Capital Plus, the no. 1 multi-asset medium equity fund since its inception in July 2001, has delivered a real return of 6.8% p.a. over this period.
- Coronation Balanced Defensive, a top-performing conservative fund, has produced a real return of 4.0% p.a. 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, 2.7% p.a. over this same period.
- Coronation Global Opportunities Equity [ZAR] Feeder, a top-performing global equity general fund since its launch in August 1997, has outperformed the global equity market by 1.0% p.a. over its more than 20-year history.
- 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 2.2% p.a. over this same period.
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. Coronation Asset Management (Pty) Limited and Coronation Investment Management International (Pty) Limited are investment advisers registered with the United States Securities and Exchange Commission (“SEC”). An investment adviser’s registration with the SEC does not imply a certain level of skill or training. Additional information about Coronation Asset Management (Pty) Limited and Coronation Investment Management International (Pty) Limited is also available on the SEC’s website at www.adviserinfo.sec.gov. The information in this document has not been approved or verified by the SEC or by any state securities authority. 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