Schroders on discretionary fund management trends in S.Africa

In a recent interview on CNBC Africa, James Rainbow, Head of UK at Schroders, discussed the role of discretionary fund management in modern investment strategies, shedding light on the performance and future prospects of such funds in the South African market. Amidst the backdrop of global geopolitical noise and uncertainty, Rainbow highlighted a positive shift in sentiment among clients and advisors, with a growing enthusiasm for the business environment. He emphasized the importance of meeting clients' objectives through a client-focused lens, considering individual preferences and risk tolerances. This approach has proven successful for Schroders, with strong performance and satisfactory returns for clients. Rainbow also touched upon the broader trends in discretionary management, emphasizing the need for a professional solution to money management and the long-term nature of investments. He noted a similar trend in South Africa, mirroring the regulatory changes and asset movement towards discretionary fund managers seen in the UK. With discretionary managers already representing more than 20% of retail assets in South Africa, Rainbow expects continued growth as these professionals demonstrate their value through partnerships with advisors and clients. The trend of growth is likely to persist, with assets flowing towards CFMs. Looking ahead, Rainbow emphasized the importance of building robust portfolios over the long term, focusing on asset allocation that aligns with clients' risk needs and appetites, rather than chasing short-term hot sectors or asset classes. He stressed the role of discretion managers in working closely with advisors to develop deep relationships and tailor portfolios to individual client needs. While there is no one-size-fits-all allocation strategy for clients, Rainbow highlighted the flexibility of working with a single discretionary manager or multiple DFMs based on advisors' preferences and clients' objectives. Overall, the future looks promising for discretionary fund management in South Africa, with continued growth expected as these professionals prove their value in navigating the complexities of the investment landscape.