Manager Research

We recently completed our review of the Kagiso fund range, and we have retained all of the ratings on the funds that we cover. Below, we provide a summary.

In 2001, Kagiso was established as a joint venture between Coronation and the Kagiso Group. In 2006, Coronation exited the business and staff are now material shareholders in the company.

Overall, our view on Kagiso’s business and shareholding structure has not changed materially since our last review. The asset manager has been set up in a way that ensures that the investment team spends the majority of its time implementing a singular investment philosophy without undue external influence. One of the concerns that we raised during our previous review was that we were concerned that shares were only being allocated to senior team members, however we have now seen positive steps taken in this regard.

During 2020, we saw a few changes to the investment team that we evaluated at the time. These changes included Simon Anderssen leaving and Satish Gosai being promoted to Head of Fixed Income and Derivatives. Satish was previously Head of Trading and we met with him during our most recent review. We were pleased with his level of knowledge and insight but we would ideally like to see how he settles into the role over a longer period of time. In addition to this change we have seen some other team changes over the years that have at times made us question if there are any underlying factors driving these changes. However, at this stage we are not too concerned and believe that the investment team at Kagiso is sufficiently resourced.

The investment philosophy and processes underpinning the equity and multi-asset funds is detailed, long-standing and clearly articulated. In addition, we continue to believe that Gavin Wood, the CIO, is core to the business and we do rate his skills as an investment manager. On the equity side, the investment team has continued to exhibit strong stock picking abilities and this is underpinned by detailed fundamental research which allows for high conviction calls to be made. In our previous review, we noted that the process is particularly long-standing and we have not seen any changes in this regard. As a result, we are comfortable retaining the Tier 1 ratings on the two equity funds.

On the multi-asset side, we have retained the Tier 2 ratings on the funds. While the strong fundamental equity processes that we rate highly form a core component of the multi-asset fund offering, there are two areas that we would still like to see mature further. These two areas relate to Kagiso’s fixed income and offshore capability. During our most recent review, we focused on gaining comfort on these two areas. While we are generally quite comfortable that these two areas are moving in the right direction, we would like to give them a bit more time to develop.

Lastly, we have our Tier 1 and Tier 2 ratings on the Islamic Equity and Islamic Balanced funds. Both of these funds draw from the same processes as the Equity Alpha and Balanced funds and we continue to feel that these are some of the strongest shariah funds currently offered in the South African market.