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STANLIB to close 15 of its funds

As it consolidates its offering.

South Africa’s third largest asset manager, STANLIB, recently announced a review of its fund range that will see it closing 15 of its unit trusts and consolidating them into other funds. The manager has just completed the process of balloting investors for approval.

Chief operating officer for STANLIB retail, Anthony Katakuzinos, says that this is something it has been looking at doing for a number of years, as it had become clear that it needed to simplify its fund offering. This is primarily because many of the firm’s funds were no longer appropriate, given how advice and investment decision-making has evolved.

“Due to changing conditions in the market, the way that people have been buying funds over the last 15 to 20 years has been changing,” says Katakuzinos. “We’ve created new products to meet those requirements, but what it has led to is quite a clutter of funds on our platform and the feedback we are getting from clients and advisors is that our range is too complex.”

An obvious example of this is that STANLIB will be consolidating all of its equity sector funds – the STANLIB Financials Fund, STANLIB Resources Fund and STANLIB Industrial Fund – into its SA Equity Fund. It is also amalgamating the STANLIB Capital Growth Fund into the SA Equity Fund, and the STANLIB Value Fund into the STANLIB Equity Fund.

“Back in the 1990s and early 2000s people were buying investment themes and looking for style and sector funds, but they don’t do that any more,” Katakuzinos says. “It doesn’t fit into the advice process because it’s fairly risky to choose funds that specific, and so they are not really relevant to the market any more.”

He believes that the broader retail market got caught up in trying to identify which themes or sectors were going to outperform, but has now realised that it’s not that easy to do.

“I think regulations have also pushed advisors to go back to basics,” Katakuzinos says. “They are looking at what they should be trying to achieve in terms of preserving and growing people’s wealth rather than picking funds, and so a lot of these specialist funds are no longer relevant.”

STANLIB is also reducing some of the duplication in its multi-asset funds, but consolidating funds in the same category. For instance, the STANLIB Moderately Conservative Fund of Funds and STANLIB Conservative Fund of Funds will be amalgamated into the STANLIB Balanced Cautious Fund.

Back to best ideas

For some time the industry more broadly has been criticised for launching too many ‘flavour of the month’ unit trusts to attract assets. This has led to managers like STANLIB having very bloated fund ranges.

“We have seen this trend of product proliferation as managers aim to attract flows and launch numerous funds and cover all areas of the market,” says Gerbrandt Kruger, an investment analyst at Morningstar Investment Management. “But it’s good to see that they have consolidated their fund range and are focusing on core capabilities. While we would not advocate closing funds for the sake of it, it is good to see a more focused fund range and the business allocating resources to those strategies that are going to add value to investors.”

STANLIB’s extensive fund range is often compared with those of its larger competitors, Allan Gray and Coronation, both of whom have very narrow, focused offerings.

“Allan Gray and Coronation recognise what their skill set is and know what they excel at,” says Kruger.

Even after closing the 15 funds, STANLIB will still have a far bigger fund range than either of these firms. However, the intention to reduce complexity is clear. It is also part of a broader industry trend towards more simplified offerings.

“We had to do a lot of work and I’m sure a lot of other players are doing the same to identify what is the right range of funds to maintain going forward,” says Katakuzinos. “It’s not a simple process or a cheap exercise to close funds, but it became very important for us to do so, especially because the size of our range doesn’t make sense any more.”

Kruger agrees that this is a positive move.

“Hopefully we’ll see more of this in the industry,” he says. “Managers should get to their core skills and competencies and provide funds or solutions that are putting the investor first and not their bottom line.”

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I remember the article last year that mentioned first this “restructure”. In the article they mentioned the poor performance of the StanLib SA Equity Fund (155/164 over 1 year and 54/60 over 10 years), which is one of the funds they are keeping.

They should recall their fund managers. 54/60 over 10 years; this is dismal fail in my books; make them rewrite their matric.

Sad…that’s why I exited Stanlib funds but still left with money market and income funds in favour of other houses.

Agreed, if you can, you must exit from ALL Stanlib funds. However, spare a thought for those Liberty Policyholders who have no choice. Liberty invests policyholder funds with Stanlib – heaven help them!?? And spare a thought for Pensioners who have retirement funds invested with Stanlib!?? What returns have they received in the past and what will they receive in the future?
BOTTOM LINE: move funds from Stanlib. They just don’t compete with Coronation, PSG, Allan Gray.

And by merging them with other funds, we also lose the poor performance record of these 15 funds, how convenient.

Start with 8 funds, 4 take a positive view on market, 4 take a negative view. Take the 4 winners next year and repeat, come the end of the 3 year cycle you will have one winner – you then market this aggressively and close the other funds.

Always be weary of asset managers with an excessive amount of funds.

STANLIB is a classic example of how to slowly but surely ruin a once great fund manager (as LIBAM and Standard Bank were in their own right). Surely a move to a best-of-breed approach (so successfully operated by Nedbank) is the way to go for STANLIB?

Best of Breed like Nedbank and their Managed Fund? If it was not so tragic it would be funny.

Avoid Best Of Breed like the plague. It means the “selling asset manager” has abrogated all responsibility and they then rely on “hope”……………..or blame the underlying active manager.

Read their trash after the Steinhoff share price meltdown. Best of Breed is for financial wimps. Just ask Neek forever living in hope..

And Herman van Velza – Head of Equities has presided over this value destruction for years and years.
What a bunch of amateurs.

While a seasoned investment professional when compared to others in this same position Van Velze does not cut the mustard.

“Don’t make what will sell. Sell what you make.”

That’s what John Bogle said about stewardship in the fund industry, more than 60 years ago.

South Africa’s self-proclaimed ‘John Bogle’ at it again! He just can’t help himself. To do justice to his comments on stewardship he should/must explain why his low cost funds are performing so poorly.

They must look back on their mismanagement of the African Bank debacle with regret. This severely undermined the market standing and was aggravated by the fact that no heads rolled at the time. They were warned but they knew better. The price is still being paid

STANLIB is slowly but surely decreasing in stature and will in all probability merge in the future with another Financial Institution.

The rush to create new funds in a market of limited stock choices is proving to have been nothing more than a marketing ploy to gain new business. The ability to differentiate the investment profiles of multiple funds within the same stable is proving to be a nonsense and an inefficient costly misuse of investors funds. They should know better and the closing of these funds despite the spin, is proof of that.

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