Coronation posts another credible set of results
17 May 2016 - Coronation posts another credible set of results
- Assets under management of R606 billion
- Diluted headline earnings per share of 229.7 cents
- Interim dividend per share of 229.0 cents
Leading independent long-term manager Coronation Fund Managers (Coronation) today announced interim results for the six months to 31 March 2016.
Coronation is a cyclical business with a revenue stream that 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. Due to a decline in the level of performance fees generated compared to the prior comparable period, revenue for the current period declined by 5.0% to R2.1 billion. This, in turn, led to a 6.9% decline in diluted headline earnings per share to 229.7 cents (March 2015: 246.7 cents).
A highly volatile market environment, combined with total net outflows of R47 billion, resulted in a marginal decline in assets under management over the six-month period to R606 billion (September 2015: R610 billion).
“We delivered a credible set of results in line with management expectations for the six months to 31 March 2016. Following an extended period of volatility in asset prices, client portfolios were well positioned to benefit from the strong rally in emerging markets, commodities, equities and the property market since the start of the calendar year”, commented CEO of Coronation Fund Managers, Anton Pillay.
For the period under review, the MSCI Emerging Markets Index delivered 6.5%, while the MSCI All Country World Index returned 5.6% (both in US dollar terms). The FTSE/JSE All Share generated a US dollar return of -0.4%, which translated into a positive return of 5.6% in rand terms for the six months. The rand continued its decline over the period, losing 5.7% against the US dollar (to close at R14.65) and 7.4% against the euro (to close at R16.70).
Coronation remains one of the leading managers of both institutional assets and collective investment schemes in the South African savings market. According to Coronation, a key driver of the business’ success is its ability to create long-term value on behalf of the clients who invest in its underlying funds. “This we do through an unwavering commitment to our philosophy of investing for the long term”, commented Pillay.
Coronation manages client portfolios of R380 billion (September 2015: R387 billion) within its institutional business. For the period, its established South African mandates recorded net outflows of R36 billion. “This was driven largely by portfolio rebalancing in a shrinking occupational retirement fund market and the fact that our SA Equity and Multi-Asset portfolios remain closed to new investors, a decision implemented in 2012”, commented Pillay.
He added that against this backdrop, stakeholders should expect continued outflows from its South African institutional business in the years ahead.
Over the period, Coronation continued to attract net inflows to its international products from global asset allocators.
Coronation’s track record of significant value creation since inception shows:
- Houseview Equity, its longest-running domestic equity portfolio, has delivered 2.9% per annum (gross of fees) ahead of the market over its 23-year history.
- Global Houseview, its global balanced portfolio, has delivered a return of 17.1% p.a. (gross of fees) since launch in October 1993, 1.5% p.a. ahead of its peer median.
- Domestic Houseview, its domestic balanced portfolio, has delivered a return of 16.7% p.a. (gross of fees) since launch in January 1998, 0.3% p.a. ahead of its peer median.
Coronation’s specialist emerging market and Africa strategies also continue to build impressive long-term track records:
- The Coronation Global Emerging Markets Strategy has generated an annualised alpha of 5.0% (gross of fees) since inception in July 2008.
- In turn, the Africa Frontiers Strategy has outperformed its benchmark by 3.3% p.a. (gross of fees) since inception in October 2008.
Following a sustained period of rapid growth and disproportionate allocation of industry flows, Coronation’s market share of long-term retail assets marginally declined to 13.7% (September 2015: 14.6%) in line with management expectations. During the period, Coronation successfully launched its tax-free investment offering and implemented a comprehensive fee and benchmark adjustment that will be completed by 1 October 2016. Total net outflows for the period were R11 billion. Coronation remains one of the country’s foremost managers of collective investment schemes, with R226 billion in retail assets under management (September 2015: R222 billion).
Highlights across the domestic and international fund range are detailed below, reflecting 1st quartile rankings in their respective Morningstar categories:
- Coronation Top 20, a top-performing general equity fund since launch in October 2000, has outperformed its benchmark by 4.4% p.a. (net of fees) over this same period.
- Coronation Balanced Plus, the no. 1 balanced fund in South Africa since launch in April 1996, has outperformed its average competitor by 2.5% p.a. (net of fees) over this same period.
- Coronation Capital Plus, the no. 1 multi-asset medium equity fund since launch in July 2001, has outperformed inflation by 7.4% p.a. (net of fees) over this same period.
- Coronation Balanced Defensive, a top-performing conservative fund since launch in February 2007, has outperformed inflation by 4.4% p.a. (net of fees) over this same period.
- Coronation Strategic Income, the no. 1 multi-asset income fund since 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 launch in August 1997, has outperformed the global equity market by 1.3% p.a. (net of fees) over this 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 average competitor by 1.8% p.a. (net of fees) over this same period.
The sustainability of Coronation’s business is rooted in its relentless commitment to long-term investing. “We have a proven investment track record of value creation on behalf of our clients and continue to put clients’ interests at the heart of all our business decisions”, commented Pillay.
By their very nature markets are cyclical and typically turn when investors least expect it. “Despite the recent rally, we expect asset price fluctuations to remain heightened as investors react to the news of the day. It is in these periods of market turmoil that we are sowing the seeds for future long-term investment returns. In a world of change, our commitment to identifying those opportunities that will generate long-term performance remains unchanged. Our success in achieving this objective will continue to generate long-term value for all stakeholders”, Pillay concluded.
Coronation Fund Managers
Anton Pillay 021 680 2000
Louise Pelser 076 282 3995
Johannes van Niekerk 082 921 9110
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