Last year this time we naïvely expected 2021 to bring with it a clean slate; instead we were thrust into a reality marked by multiple Covid-19 strains, resurgent waves, and a war in Europe. While vaccines have given us some comfort that Covid-19 might subside, inflation and growth concerns mean there is still a good dose of caution needed as we navigate 2022.
Alongside the pandemic, climate change has continued to take centre stage. Last year we identified it as the priority issue for the world and our sustainability efforts have remained a central focus for our business. We believe in sustainability with substance. It is about a better world and, in the case of climate, avoiding a calamity. Ninety One is committed to rise to this challenge in the years to come and will continue to advocate for sustainable development and do our best to manage our direct impact on the environment and society responsibly and wisely.
At our recent In Perspective Forum hosted in Cape Town on 16 March 2022, we discussed whether the commitments pledged at COP26 will engender real change, the role of infrastructure in helping to secure a sustainable future and how capital should be allocated to achieve real impact. Our country has one of the most carbon-intensive economies in the world. It is critical to our future that we achieve an inclusive transition to net zero that does not leave our economy or communities behind. Along with industry leaders, partners and nearly 100 institutional clients in attendance we challenged corporate South Africa to implement decarbonisation goals. Look out for the highlights from the event and links to the discussions in this issue of In Perspective, as well as a more in-depth exploration of the infrastructure opportunity and how we think about managing transition risks on the road to net zero.
The conflict in Europe has accelerated key global trends, including the expanding role of government in the economy. The implications of the war in Ukraine for financial markets and the global economy are far-reaching. Global capital markets have experienced extreme volatility since the invasion began. Initially, the fallout from the war and heavy sanctions imposed on Russia prompted a sharp sell-off across equity markets and a concurrent flight to quality.
However, with little sign of a resolution, the immediate focus of investors shifted towards central banks, and how they would balance the threat of inflation against slowing global growth. The Federal Reserve and Bank of England both raised interest rates, coupled with decisively hawkish rhetoric – particularly from the Fed – has led to a marked split between the performance of equities and bonds.
Russia’s invasion of Ukraine has caused a humanitarian tragedy for the Ukrainian people. Our thoughts and prayers are with the nearly twelve million people who have fled their homes as well as those who have chosen to stay and defend their country. This is indeed a sad time, and we are thinking of all of those who are directly and indirectly affected, especially those who have lost loved ones.
Back home in South Africa, our thoughts are also with the people of Kwazulu Natal, who – less than twelve months after the riots that troubled their province – are now faced with the additional aftermath of an environmental disaster.
We welcome National Treasury’s decision to increase the offshore allowance to 45% for Regulation 28 funds, as it broadens the opportunity set for South African savers. As South Africa constitutes less than 1% of global indices, increased flexibility to invest abroad provides investors with wide-ranging opportunities to deliver superior risk adjusted returns over time. We have included a perspective from Hannes van den Berg, Co-Head of SA Equity & Multi-Asset in this edition, on how he and his team are weighing up the opportunities and challenges presented by this increased flexibility.
We believe Ninety One is well positioned to be the preferred offshore partner for our South African clients. We are the only truly globally integrated South African investment management company with more than 250 investment professionals across various geographies. Integration allows us to implement global best practice across all aspects of our business thereby ensuring, we can meet the specific needs of South African institutional investors. Our globally integrated teams enable us to deploy capital in a holistic manner, as we understand the risks unique to our home market. We have proven ourselves on the global stage with support from some of the largest consultants and allocators across the globe.
We also believe our loyal South African client base would want to support a South African-rooted manager whose diverse teams have delivered performance across their global strategies. We are the only global manager in South Africa with a B-BBEE Level 1 rating, which means that we remain an important contributor for SA retirement fund’s in meeting the requirements of the FSC scorecard. This will not be possible with an allocation to an offshore-based fund manager with no rating.
Furthermore, we actively leverage our position in South Africa for the benefit of our global clients and business.
A meaningful part of the global operations team supporting the international business – a staff complement of approximately 250 people – is based in South Africa. These areas include investing, technology, business operations and human capital.
We were honoured to have President Cyril Ramaphosa deliver the keynote address at our recent
30-year celebration. Exactly two years after listing as Ninety One, we finally had the opportunity to host clients, shareholders, friends of the business, alumni and staff in Cape Town. He thanked our CEO Hendrik du Toit and the firm for the contribution we have made to investing for a better tomorrow. “Ninety One is a proudly South African firm, with a truly global footprint. True to its ethos, Ninety One continues to invest for a world of change. It is a firm that I am pleased to say is committed to transformation and gender equality.”
In closing, I would like to thank our South African clients who have entrusted us with their capital for over
30 years. We look forward to hosting our Investment Institute Forum in London in July where we will share insights from our CEO Hendrik du Toit and portfolio managers and hope you can join us.
We appreciate your continued support. Stay safe.
Warm regards
Natalie Phillips
Deputy MD, Africa Client Group
