Ninety One, Allan Gray, Coronation, and PSG Wealth attacked over fees

Ranmore portfolio manager, Sean Peche, has launched a scathing attack on South Africa’s largest asset managers for their opaque fee structure and unjust performance fees.

Speaking to Biznews founder Alec Hogg, Peche described performance fees as a “R600 billion ripoff which should be stopped”.

He said performance fees are extremely complicated and that South African retail investors do not understand what they are paying.

He added that the funds select their own benchmarks on which performance fees are calculated, which is not in the interest of investors.

Looking at the ten largest non-income funds in South Africa, it becomes clear what Peche is unhappy about.

  • 83% of assets under management in non-income funds in South Africa have performance fee structures.
  • 0% of assets under management in non-income funds in the United Kingdom have performance fee structures.

To put it in perspective, the weighted average total expense ratio (TER) of the top ten funds in South Africa is 1.5%. In the UK, it is less than 0.5%.

In simple terms, it means that it is three times more expensive to have your money managed in South Africa than in the United Kingdom.

To illustrate his point, Peche dissected the fee structures of Ninety One, Allan Gray, Coronation, and PSG Wealth, arguing that they are overly complex and not Investor centric.

“I’m on a mission to inject R5 billion a year into South African savers’ hands with 0.5% lower fees on R1 trillion of their investments,” he said.

Peche received widespread support for his mission, including from high-profile investment managers like Brenthurst Wealth Management founder Magnus Heystek and Counterpoint’s Piet Viljoen.

Heystek praised Peche for his investigation, saying he shone the light on an area where South African asset management companies do not want people to go and look.

Viljoen said he stands with Sean Peche. “Large fund management houses consistently underperform the broad market, despite outperforming their chosen benchmarks,” he said.

“Most investors – especially large ones – would be better off buying the index plus a bit of specialist fund management skill.”

Daily Investor asked Ninety One, Allan Gray, Coronation, and PSG Wealth for comment about Peche’s attack.

Coronation said it has no comment at this time. Ninety One, Allan Gray, and PSG Wealth did not respond by the time of publication.

Performance and fees compared

The table below compares the performance and fees of prominent funds from Ninety One, Allan Gray, Coronation, PSG Wealth, Counterpoint, and Ranmore.

Fund Performance and Fee Comparison
Fund 1-Year Performance Management Fee Performance Fee Total Investment Cost*
Coronation Global Optimum Growth -31.9% 1.35% 0% 1.58%
Ranmore -0.5% 0.90% 0% 1.62%
Allan Gray Stable Asset 7.70% 1.00% 0.40% 1.66%
Ninety One Equity Fund 3.90% 1.01% 0.84% 2.06%
Counterpoint SCI Value 20.3% 1.41% 0% 2.64%
PSG Global FoF -15.6% 1.50% 0.34% 2.98%
*Total Investment Cost (TIC) = Total Expense Ratio (TER) + Transaction Cost (TC)