Ninety One sees fund outflows of R65.5bn

South Africa’s biggest listed asset manager Ninety One saw clients draw £3.2 billion (R65.5 billion) from its funds in the six months to September 2022 as investors grew risk averse amid “extremely challenging” market conditions, it said.

This was however down from the outflows of £3.9 billion (R80 billion) in the six months to September 2021.

Ninety One, listed on the Johannesburg and London bourses and founded by current CEO Hendrik du Toit, released its interim financial results on Tuesday.

Du Toit said its performance, which showed an 8% decrease in assets under management to £132.3 billion (R2.7 trillion), is a result of Ninety One being a “risk-on” business that is operating in a “risk-off” environment.

Read: UK pensions crisis exposes structural holes: Ninety One

He blamed a mix of lower levels of new business volumes and clients derisking their portfolios for the outflows, saying he expects tough conditions to persist for the foreseeable future.

Ninety One’s results reflect a lack of confidence in markets this year, with volatility fuelled by central banks raising interest rates to fight off inflation in many economies.

The asset manager has adopted a cautious outlook as it rides out the interest hiking wave, with Du Toit saying there will be no easy gains ahead for investors.

“How long do we think tough conditions are going to last? Well, we don’t know. We’re waiting for the peak [in] interest rates,” he said, pointing out that interest rates and thus inflation are still on the rise.

Read: The war on inflation

The market may still have “accidents”, he added, such as the blow up of the Chinese property market, crypto currency meltdowns and a correction in the tech market that has seen mass layoffs.

“When you have these processes of liquidity withdrawal as we’ve seen … particularly of the last six months … you also get accidents. There are still a few accidents that should still happen before markets settle down, we don’t necessarily know where they are …”

Ninety One reported that half-year profit before tax declined 16% to £110.6 million (R2.3 billion), while basic headline earnings per share decreased 5% to 9.4 pence.

The company declared a dividend of 6.5 pence, 6% lower than the interim dividend in its 2022 financial year.

Most of the group’s reported outflows for the interim period stemmed from UK investors, said Du Toit – predominantly in the institutional space, where much of the derisking took place.

Those investors “cleverly took money off the table and are either sitting and waiting for opportunities as the market cheapens” or are selling on the back of liability-driven investment issues.

Read: ‘SA not on the edge of the abyss’ – Ninety One

Compared to the UK, Ninety One’s client base in South Africa was resilient and stable.

Du Toit said this is because “there wasn’t this panic in their world” – unlike the UK, where the central bank “was ahead of the curve” and created the kind of inflation people panic about.

At the JSE’s close on Tuesday, Ninety One’s share price had fallen almost 2.5% to R43.20 a share.

Listen to Du Toit speaking about the group’s half-year performance on SAFM Market Update with Moneyweb: