Why this multi-manager has a range using only black managers

Weaver’s Ngoni Gwatidzo said there was a general impression that black managers do not perform and are risky, but results show that these fears are unfounded.

Weaver Investment Management uses only black managers – 18 of them – across its three multi-managed funds.

While the firm uses a range of managers such as Coronation Fund Managers, M&G Investments, Old Mutual and Ninety One on the Montrose Asset Management range it also manages – Weaver restricts itself to empowered managers when it comes to its own funds.

The firm’s CIO Ngoni Gwatidzo told Citywire South Africa that it believes this is a necessary contribution to transformation in the country.

‘The idea was to not only support black managers, but also empower those unable to enlist consultants’ support,’ he said. ‘The big consultants require you to have a three-year track record, and at least so much in AUM.’

The six unit trusts – which have a total AUM of more than R1bn – run by Weaver are:

• Weaver BCI Balanced fund of funds
• Weaver BCI Moderate fund of funds
• Weaver BCI Stable fund of funds
• Montrose BCI Cautious fund of funds
• Montrose BCI Flexible fund of funds
• Montrose BCI Moderate fund of funds

The firm also manages other assets in model portfolios for independent financial advisers. Gwatidzo (pictured below) said Weaver’s total AUM on a gross basis is R2bn.
In its unit trusts, his company includes funds managed by:

• Aeon Investment Management
• Afena Capital
• Aluwani Capital Partners
• Argon Asset Management
• Balondolozi Investment Services
• Benguela Global Fund Managers
• Camissa Asset Management
• Cartesian Capital
• Excelsia Capital
• Lima Mbeu Investment Managers
• Lodestar Fund Managers
• Mazi Asset Management
• Meago Asset Managers
• Mergence Investment Managers
• Prescient Investment Management
• Prowess Investment Managers
• Sesfikile Capital
• Vunani Fund Managers

The criteria that Weaver used to select its managers include that companies must have 50% black ownership plus one, and black management.

Nurture

‘We nurtured a few of them, so the bigger players and consultants came on board. There was this impression that black managers don’t perform, and investors must be careful because they are risky.

‘We discovered these fears were unfounded because some of these guys were good managers when they worked for corporates. Nothing stopped them from excelling when they went on their own,’ he said.

‘What we have seen is that almost everyone is transformed. The transformation we’re discussing is meaningful and allows black managers to own and manage. However, there is a lot of resistance among traditional consultants.’

Gwatidzo started his career in 1980 at Old Mutual Zimbabwe before spending 43 years in the financial services and investment industry.

‘I cut my teeth at Old Mutual as an analyst and worked under Leon Campher, [who later became Asisa’s chief executive]. I then moved to Fedsure Asset Managers in the early 1990s.’

Gwatidzo later became head of equities at Women’s Investment Portfolio Asset Managers. In 1999, he moved to lead NBC’s investment division, one of the country’s major black administrators, before joining Analytics Consulting Group.

In 2006, Gwatidzo set up a DFM – Gatzo Independent Investment Advisers.

Need to expand

‘I needed to expand and invited Owen Khumalo, who was working at Old Mutual, to be Weaver’s chief executive. Then we rebranded Gatzo to Weaver Investment Management in 2017.’

Gwatidzo said Weaver has a long-term investment philosophy. ‘The investment world moves in cycles, and you must identify where in the cycle the market is. We try to ensure our portfolios offer smooth returns using assorted styles, including growth, value and quality.

‘We believe in lowering costs. Where possible, we combine passive and active management.’

Gwatidzo said his best business decision was to leave the confines of corporate life and achieve personal freedom.

‘Corporates have straitjacketed thinking and don’t allow innovation. However, you face a lot of uncertainty once you leave them. You are unsure whether you can put bread on the table as the industry is cutthroat.

‘The big players don’t care. If you stand in their way, you get crushed. There is satisfaction if you prevail and survive that onslaught.’

During his career, Gwatidzo has seen the asset management and financial services sector evolve. One of the biggest developments he witnessed was the big life houses spinning their asset management firms off as independent entities.

A second key trend was the evolution of boutiques. The third was the transformation and emergence of black managers.

Market saturation

According to Gwatidzo, the asset management market was reaching saturation due to lack of differentiation.

‘Almost every other guy wants to set up an equity fund.’

Gwatidzo’s company wants to launch B series funds, which will be unconstrained. A combination of black-owned and established asset managers will manage the portfolios.

‘We would like these black managers, who have proved themselves, to compete and manage alongside established managers. We no longer want to differentiate players in terms of a transformation but rather based on performance and risk metrics.’