Africa-Press – South-Africa. From 1 July 2025, South Africa’s largest pension funds administrator, Alexforbes, won’t do business with asset managers that don’t meet transformation requirements it has set in its new policy.
The company unveiled its new transformation policy on Thursday morning and was going to meet with asset managers later in the day to take them through it. The policy comes into effect on 30 June but to accommodate asset managers who are still trying to get more black and female representation in their teams, the company will have a three-year phase-in process.
After that, any asset manager and asset consultants who want to deal with Alexforbes and manage money on behalf of its pension funds clients will need to at least be certified as a Level 3 BEE contributor.
This is still less transformed than Alexforbes’ and many other big asset managers’ Level 1 BEE status. But Alexforbes wants to push the envelope more on black and female representation in the investment teams. Sometimes a company can have an impressive BEE contributor status with very few or no black people in positions that matter in the investment industry, like portfolio managers and chief investment officers.
And this applies to both asset managers and consultants that already have a relationship with Alexforbes and those who are still looking to do business with the firm.
Transformation a growing thorn in big asset managers’ side
“From 1 July 2025, we won’t have asset managers that don’t meet these requirements in our portfolios,” said Alexforbes head of manager research, Lebo Thubisi.
Thubisi said the company will adopt punitive action against managers who still don’t transform within the three-year phasing process that Alexforbes has allowed because even though the industry has been transforming, it is not where it should be. So, it will drop managers who don’t make any improvements if needed.
And with over R400 billion in assets under management (AUM), Alexforbes thinks it can influence the change it wants to see. It hopes that out of fear for their own sustainability, the asset managers it works with will make the necessary change.
“The industry must accept that the carrot is gone. In fact, much of what you see with the FSCA requiring minimum BEE levels, it says right now the stick has come out” said Thubisi.
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Why the stick is coming out
While preparing this policy, Alexforbes ran a survey, inviting 142 asset managers to show their commitment to transformation. Only 68 responded, but that cohort matters a lot as it manages R5.1 trillion of assets in SA.
So, under its new policy, Alexforbes will identify and support start-up and emerging black asset managers more. It wants to allocate more of its clients’ monies to managers with less than R2 billion in AUM. It will support more start-ups with less than a five-year track record.
And for emerging asset managers, Alexforbes will look for those with a track record not exceeding 10 years, and an AUM of less than R15 billion.
The survey also showed that black Africans made up only 35% of CEOs and 23% of chief investment officers in the industry in 2020. Portfolio managers are still predominantly white (54%), and the investment teams are dominated by men.
“We need to see a much bigger participation, much more diversity, much more inclusion and definitely from a racial perspective, we’d like to see it being much more representative of where we are in South Africa from a demographic perspective,” said Alexforbes’s chief investment officer, Gyongyi King.
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