Written by Jannie Leach and Leonard Mamogobo

Insights

• The largest fund houses manage the bulk of the rules-based assets, globally and in South Africa. The top five global and South African managers oversee approximately 77% and 89% of all rules-based assets respectively in each market.
• Most of these asset management giants have high market shares in both the active and rules-based markets indicating that asset management is increasingly requiring scale to compete.
• The largest five rules-based managers in each market also attract most of the net flows (>90%) each year.
• The largest funds within the South African rules-based market are increasingly beginning to look like the broader CIS industry, with multi-asset funds increasingly dominating the top 10 funds list.

The global giants

The “global giants” manage the bulk of active and rules-based assets. The ten largest houses accounted for 35% of total industry assets and 88% of the rules-based assets in 2023. It must be noted that the industry is highly concentrated, with Blackrock and Vanguard overseeing 57% of all rules-based assets, and the next three managers looking after another 20%. 

The growth in rules-based funds within these houses has resulted in economies of scale, which has led to the reduction in costs for investors over the years. However, this has also meant that they have come under increased scrutiny over “holding enormous [voting] power”. As a result, we are seeing a trend towards asset managers offering investors the scope to do their own proxy voting and/or select their own proxy voting agent.

Source: Largest Asset Managers by AUM in 2024 (investingintheweb.com) updated to 31 December 2023 using the latest financial results for each firm.

South Africa's leading asset managers

The South African industry is even more concentrated than its global equivalents, with the largest ten firms managing 72% of the total assets in the industry and 90% of rules-based assets. Over 90% of these assets are in traditional active strategies however, as we discussed in Part 2 of this series, rules-based assets are growing significantly faster than their active counterparts. Life insurers, banks and other vertically integrated firms have seen the most growth in rules-based assets while independent asset management firms, still have a focus on traditional active management, similar to many of their global peers.