Sygnia, the fund management company determined to disrupt the traditional wealth management market, is hoping for a wave of growth from its umbrella fund initiative in the next few years.
Sygnia, the fund management company determined to disrupt the traditional wealth management market, is hoping for a wave of growth from its umbrella fund initiative in the next few years.
Despite tricky conditions in the fund management sector during the financial year to September, Sygnia on Wednesday reported a 22% increase in aftertax profit to R72.3m.
Most of the profits were paid out in dividends, which topped 52c per share.
Sygnia reported 16% growth in assets under management to R158.4bn, indicating meaningful market share gains. Institutional assets under management increased 15.1% to R147bn and in retail 29% to R11.2bn.
The company will increase advertising and marketing spending significantly in the financial year ahead in a bid to increase the profile and visibility of the Sygnia brand among retail investors.
Sygnia CEO Magda Wierzycka said the business case had been bolstered markedly by the launch of the Sygnia Umbrella Retirement Fund (Surf).
While stand-alone retirement funds serve just one employer, an umbrella fund hosts numerous employers under one legal structure.
She contended that Surf combined the most advanced thinking on benefit design, cutting-edge technology platforms and the lowest costs in SA. "We have plugged in systems that no one else has...."
Wierzycka said that within five months of its launch Surf had become a well-known alternative to established umbrella funds, which were typically sponsored by life insurance companies.
"We have broken through the established barricades of the umbrella funds market. We think Surf has big legs for growth in the next few years." The fund had grown from R1.2bn in assets under management at launch to R1.5bn at the end of September. "There is a further R1.2bn in assets awaiting regulatory approval for transfer."
Vunani small to mid-cap analyst Anthony Clark said Sygnia’s first set of full-year results since listing on the JSE in 2015 were commendable, given weak and competitive markets in the wealth-management segment.
New products and umbrella funds had gained traction during the reporting period. "Sygnia invested heavily in systems, people and products in 2016. The profit growth underlines the strength of their business model. More will be achieved in 2017 as the base is now set for aggressive growth with little new costs that need to be added."
Clark said competitors in the asset management industry did not like Sygnia and were probably reluctant to invest in it. "But what is in no doubt is that fearsome … Wierzycka is gunning for significant assets under management growth in financial 2017 and 2018. Her competitors should be scared."
Wierzycka said while the focus was mainly on organic growth, there was a pipeline of acquisitive opportunities. "We could look at adding smaller players to Surf as well as look at strategic acquisitions."
Sygnia launched 4th Industrial Revolution Global Equity Fund in November in collaboration with Kensho Technologies, a big data analytics company. The fund tracks 13 market indices composed of companies in segments such as virtual reality, 3D printing, nanotechnology and clean technology.