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New interest in equities boosts Ninety One

Remarkable growth since its (smallish) beginning as Investec Asset Management.
CEO Hendrik du Toit attributes the strong performance to Ninety One’s ability to attract and retain the talent required in a ‘brutally competitive’ industry. Image: Supplied

A renewed appetite for investing in equities and strong stock markets boosted asset manager Ninety One in the six months to September 2021. In short, the stock market crash predicted by many a commentator did not happen.

Equity markets worldwide rallied to new records, as was seen in SA this week, when the JSE All Share index reached a new high of above 70 000 points on Monday.

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Ninety One reported a “record first half and positive business momentum” with assets under management increasing by 7% to £140 billion (around R2.9 trillion at the November 16 exchange rate) at the end of the six months compared with just below £131 billion at the beginning of the reporting period.

Net inflows of £3.9 billion contributed to part of this increase in assets and rising share prices did the rest.

Healthy growth

The figures presented to shareholders disclose that the average assets under management during the six months under review were actually some 20% higher than a year ago. The healthy growth in assets led to an increase of 16% in management fee income, to nearly £315 million compared with £270 million in the six months to September 2020.

Profit after tax increased by 39% to £101.4 million and headline earnings per share showed an increase of 25%.

The strong growth seems to come from a change in mindset among investors with regards to the prospects of share markets.

Figures presented during a discussion of the results showed that Ninety One benefitted from an inflow of new funds into equity investments of nearly £1.9 billion. In comparison, there was a net outflow of £1.3 billion during the first half of the previous financial year due to a period of market uncertainty.

Ninety One also reported an increase in the net flow for investment in bonds, from £1.35 billion a year ago to £1.9 billion during the last six months.

Hendrik du Toit, chief executive and father of ‘twins’ Ninety One plc and Ninety One Ltd, mentioned in the results presentation that net inflows came largely from a recovery in advisor activity – with nearly £2.4 billion of the £3.9 billion inflow of new money from the advisor channel and £1.5 billion from institutional investors.

Du Toit attributes the strong performance to Ninety One’s strategic approach and people-centric business model with its strong owner culture, which he believes supports its ability to attract and retain the talent required in the “brutally competitive” investment management industry.

He mentions that staff shareholding in Ninety One continued to increase, reaching 24.5% at the end of September.

Listen: Hendrik du Toit discusses Ninety One’s interim results and its record assets under management on the SAfm Market Update with Moneyweb

Winning formula

“The combination of strategic clarity, disciplined execution, competitive investment performance, a motivated, stable team and a long-term approach to business continues to work well for Ninety One,” says Du Toit.

“While the supportive market conditions of this reporting period will not last indefinitely, we see substantial long-term growth opportunities ahead.

“We will continue to invest in our people and our business so that we can deliver for our clients. This remains our formula for value creation.”

Valuable journey

It’s worth translating a few of the figures into rands to illustrate Ninety One’s growth since its formation in its current form in 2019 and listing in 2020.

In rand terms, assets under management topped R2.4 trillion at the end of September 2021 compared with R196 million in 1991 (£40 million as disclosed in the pre-listing statement when the exchange rate was R4.90 to the British pound).

Du Toit reported in May 2020: “This was a year of meaningful progress in the strategic positioning of Ninety One as an independent, focused investment manager with significant employee ownership.

“We executed a demerger [from Investec] and listing, with an exciting new brand.”

Ninety One then reported inflows of £6 billion for the year to March 2020 and assets under management of £103.4 billion.

The share price took a knock on the JSE a few months after its listing. Ninety One plc fell to R27.50 and Ninety One Ltd R25.70. The recovery was swift with, both trading above R50 again.

Ninety One plc and Ninety One Ltd

Listen to Ryk van Niekerk’s interview with Hannes van den Berg, co-head of SA Equity & Multi-Asset within the 4Factor team at Ninety One (or read the transcript here):

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