Coronation delivers solid set of results
23 May 2017 Coronation Insights
- Assets under management of R576 billion
- Diluted headline earnings per share 220.7 cents
- Interim dividend per share of 220.0 cents
Johannesburg, 23 May 2017 – Leading independent long-term asset manager Coronation Fund Managers (Coronation) today announced interim results for the six months to 31 March 2017.
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.
According to Anton Pillay, Coronation CEO, “We delivered satisfactory results in line with management expectations. Our client portfolios have performed well, notwithstanding another period of anaemic returns in the South African market.” For the six-month period, the MSCI All Country World Index delivered a return of 8.2% (in US dollar terms), while the FTSE/JSE All Share Index gained 1.6%.
Revenue for the current period declined by 6% to R1.9 billion. Diluted headline earnings per share decreased by only 4% to 220.7 cents, due to Coronation’s variable cost structure and focused cost control. Over the six-month period, assets under management declined to R576 billion (September 2016: R599 billion).
Coronation is one of the leading managers of institutional assets in South Africa, managing assets for more than 80% of the top 200 retirement funds in the country. Institutional client portfolios total R350 billion (September 2016: R374 billion).
Pillay notes that Coronation operates in a net outflow market within the South African retirement space. In addition, Coronation’s top-performing SA Equity and Multi-Asset portfolios have been closed to new institutional clients for the past five years. The funds were closed after Coronation attracted cumulative flows over a number of years that were higher than anticipated. After careful consideration, the portfolios were re-opened to new institutional clients in March 2017.
“Our complete and diversified range of portfolios is now available to clients. In addition, we continue to gain recognition among global asset allocators for our international capabilities that have been built out over the past decade,” Pillay says. Over the six-month period, Coronation continued to attract net inflows to its international strategies from global clients.
“We are proud of the investment returns achieved by our institutional clients who have been invested with us for the long term. All of our institutional portfolios have outperformed their benchmarks over the past 15 and 20 years,” adds Pillay. Coronation has maintained its compelling investment track record:
- Coronation Houseview Equity has produced a return of 17.7% p.a. since its inception in 1993, delivering an active return (alpha) of 2.9% p.a. Coronation Aggressive Equity has produced a return of 18.2% p.a. since its launch in 2002, delivering alpha of 2.9% p.a.
- Coronation Global Houseview has produced a return of 16.5% p.a. since its launch in 1993, delivering alpha of 1.4% p.a. Coronation Managed has produced a return of 17% p.a. since its launch in 1996, delivering alpha of 3% p.a.
- Coronation Strategic Bond has delivered a return of 10% p.a. since its inception in 2008, while Coronation Active Bond has produced 11.6% p.a. since its launch in 2000.
- Coronation Global Emerging Markets Equity Strategy has generated alpha of 4.7% p.a. since its inception in July 2008.
All institutional performance returns are stated gross of fees
Coronation remains one of the country’s foremost managers of collective investment schemes, with a market share of 12.8% (as at December 2016).
“As anticipated, following a sustained period of rapid growth in the industry and a disproportionate allocation of industry flows, we have seen net outflows in recent years,” Pillay says. “There has been a stabilisation in outflows from our funds over the period under review, totaling R4 billion.” After taking capital appreciation into account, retail assets under management rose to R226 billion (September 2016: R225 billion).
Highlights across Coronation’s domestic and international fund range are detailed below, reflecting first quartile rankings in their respective Morningstar categories:
- Coronation Top 20, a top-performing general equity fund, has outperformed its benchmark by 4.6% p.a. since its 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 1.48% p.a. over the past 20 years.
- Coronation Capital Plus, the no. 1 multi-asset medium equity fund since its inception in July 2001, has outperformed inflation by 6.80% p.a. over the 15-year period.
- Coronation Balanced Defensive, a top-performing conservative fund, has outperformed inflation by 3.8% 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 0.99% p.a. over its almost 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 1.73% p.a. over this same period.
All retail performance returns are stated net of fees
“We are focused on long-term investing, which remains the bedrock of our business. Volatile markets offer opportunities to take long-term positions that will ultimately deliver compelling returns for our clients over meaningful periods. We believe our portfolios are well-positioned to manage the risk that recent political uncertainty has created for South African investors. While continued near-term volatility and uncertainty may persist, our robust investment approach enables us to make the appropriate long-term decisions for the benefit of our clients,” Pillay concluded.
Anton Pillay (Coronation Fund Managers)
021 680 2000
Analyst & investor relations enquiries:
Johannes van Niekerk
082 921 9110
Vanessa Baard (ByDesign Communications)
082 331 8158
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