Manager Research

Ninety One recently announced some meaningful changes to its investment team, which influence the funds that we rate. These changes have come at a time when the company is navigating the acquisition of Sanlam Investment Management (SIM) from Sanlam. We continue to maintain positive rating views on most of Ninety One’s funds.

Although the deal adds scale to Ninety One’s business, corporate actions like this create a challenging environment for active management. This is primarily because they can disrupt investment teams, investment processes and the ability of the business to remain focused on generating compelling active returns.

We elaborate on these below, as well as recent changes to the investment team that Ninety One has announced.

SIM Acquisition and Business Update
Towards the end of last year, Ninety One announced that it would be buying Sanlam’s active investment management business – Sanlam Investment Management (SIM) from Sanlam.

As a reminder, SIM is a wholly owned subsidiary of Sanlam Investment Holdings (SIH) and represents the group’s active investment capability. Other businesses within the SIH portfolio include Satrix (the index-tracking business), Sanlam Multi-Manager, and Sanlam Collective Investments, among others.

Ninety One’s acquisition of SIM is pending approval by the Competition Commission, and given that Ninety One and Sanlam are JSE-listed entities, there is considerable detail that they are unable to currently disclose. However, as part of the deal, Ninety One will become Sanlam’s primary active investment manager for both local and global single-managed products. As a result, Ninety One will acquire SIM’s active assets under management, revenue streams, and investment professionals. Ninety One will also manage the assets of Sanlam Investments UK, and its staff will transition as well.

In return for these assets, Sanlam is receiving an equity stake in Ninety One and will become a long-term shareholder in the business. Ninety One currently manages over ZAR3 trillion in assets, and this deal is expected to add a further ZAR400 billion.

Overall, this deal adds scale to Ninety One’s business, but we have several questions regarding (1) how effectively the investment teams will integrate over the long term, (2) how the additional assets acquired by Ninety One will be invested, and (3) whether the deal will support Ninety One’s actively managed investment propositions, many of which we currently rate positively, over the longer term.

In our experience, these kinds of corporate actions do not create a positive environment for active management, and we are watching developments closely.

As previously mentioned, a decision from the Competition Commission is expected within the next few months and we will provide an update at that time.

Changes to the Global and Local Multi-Asset Teams
While the SIM deal is being finalised, Ninety One recently announced that Iain Cunningham, Head of Multi-Asset Growth and portfolio manager for the Ninety One Global Strategic Managed Fund, will be leaving the business for personal reasons. He will be replaced by David Knee, who has been appointed as Head of Multi-Asset and will take up this role towards the end of 2025. Most recently, David was Co-Deputy CIO of Fixed Income at M&G in London. Before that, he was CIO of M&G South Africa.

In addition, Rehana Khan has been promoted to Co-Head of South Africa Equity and Multi-Asset, alongside Hannes van den Berg. She has also joined the portfolio management team for the Global Strategic Managed Fund. Rehana joined Ninety One from M&G South Africa in 2020 and has primarily managed equity mandates for the company since then. Rehana and David previously worked together at M&G South Africa.

Iain has managed the Global Strategic Managed Fund since 2016, and his departure and replacement is significant. Although we believe David is a strong addition to the team, to our knowledge, he has limited experience managing global multi-asset mandates and his background has primarily been in fixed income. Similarly, while we believe Rehana’s addition to the team will bring valuable equity experience, she has limited experience managing global multi-asset mandates.

To that end, we have taken the decision to downgrade the Global Strategic Managed and Global Strategic Managed Feeder Funds from Tier 2 to Tier 3. Ultimately, these changes may prove positive for the fund over the long term, but currently we believe there is too much uncertainty to warrant a positive rating view.

Changes to the South African CIO Role
In addition to the above, Ninety One recently announced that Duane Cable has stepped down from his role as Chief Investment Officer for South Africa and will be replaced by Horatius Maluleka, who joins the business from the Public Investment Corporation (PIC), where he was the Executive Head of Listed Investments.

Duane will continue in his role as a portfolio manager and Head of South Africa Quality. He remains a key part of both the Ninety One Opportunity Fund and the Ninety One Cautious Managed Fund, which we continue to rate Tier 1.

Overall, we believe it is important that Duane remains focused primarily on portfolio management responsibilities, and we view this development positively from that perspective.

Below, we summarise our current rating views across the Ninety One fund range.