DEI in asset management – 27four launches SA’s first benchmarking framework.

30 October 2024

Financial services group 27four has earlier today (Wednesday 30 October) launched South Africa’s first benchmarking framework to measure diversity, equity, and inclusion for the asset management sector. The framework was launched during a media event held at the JSE in Johannesburg.

“The 27four DEI Index framework offers a comprehensive approach to measuring DEI in South Africa’s asset management industry. It assesses asset managers across five key dimensions – ownership, representation, equity, impact, and governance -with the aim of driving transformation.?

“Aligned with global standards, the Index positions DEI as both a social and economic imperative. It not only provides a standardised framework for asset managers to evaluate their DEI performance but also serves as a tool for investors to screen asset managers based on DEI criteria,” says 27four’s CEO Fatima Vawda.

She explains that this latest publication marks an evolution from their initial endeavour, which began in 2009 as the BEE.conomics Annual Transformation in South African Asset Management Survey.?

“Since its inception, the BEE.conomics survey has served as an important instrument in raising awareness of the participation and representation of black people and women in asset management in South Africa. It has also become a reliable source of data for measuring the state of transformation in the sector and identifying trends shaping the future of the industry,” says Vawda.

In putting this framework together, the company collected data from 93 asset managers overseeing R8.42 trillion in assets. The report is freely available for download and reveals key insights into industry trends, best practices, and progress toward greater inclusivity and representation.?

“Research has consistently shown that investment teams with balanced diversity deliver superior returns. Teams composed of individuals from different backgrounds exhibit "cognitive diversity," where the combination of their varied experiences, beliefs, and perspectives leads to faster and more effective problem-solving.

“This report not only reflects the current state of the industry but also serves as a roadmap for the future, outlining the steps needed to drive social progress, enhance financial outcomes, and foster innovation,” explains Vawda.

Some of the key findings include that:

• The top five asset managers oversee approximately 65% of the total market AUM, while the top 10 manage around 81%, and the top 20 account for 92%.
• The AUM distribution, with 60.5% invested locally and 39.5% offshore, reflects a balanced approach that aligns with South Africa’s exchange control restrictions.?
• Public markets account for 90% of the total AUM, with private markets comprising four percent and six percent classified as “other.”
• Top DEI performers across different AUM categories include Old Mutual Investment Group (over R100bn AUM), Terebinth Capital (R30bn–R100bn AUM), Perpetua Investment Managers (R10bn–R30bn AUM), and Secha Capital (less than R10bn AUM).?
• DEI scores vary significantly across firms, with a mean score of 45% and a range from 15% to 78%, reflecting the disparities in DEI performance across the industry.

“Our research has found that the industry has made progress in black ownership, with 74% of firms having over 51% black ownership. This indicates meaningful strides toward economic transformation. However, only 18% of firms have over 51% women ownership, revealing a substantial gender gap that reflects ongoing challenges in achieving gender equity in ownership,” adds Vawda.

While black individuals are represented in senior leadership roles (66% of CEOs are black, and 63% of chairpersons are black), women are significantly underrepresented. Only 18% of CEOs and 16% of CIOs are women. Women tend to occupy more entry-level positions, such as analysts, but face substantial barriers to progressing into senior decision-making roles like portfolio managers, where 76% of firms report less than 30% women representation.

Vawda points to encouraging progress in pay parity, with 94% of firms reporting gender pay equality, which compares favourably to global trends. However, gaps in promotions and retention remain. While 97% of firms promoted black employees at similar rates as white employees, only 87% did so for women compared to men.?

The retention of black and women employees also lags, with 13% of firms reporting differences in retention for black employees and 15% for women. Moreover, recruitment data shows that while 94% of firms hired black individuals at rates comparable to other racial groups, only 84% did so for women, reflecting the need for more robust strategies to improve gender diversity.

“Asset managers were also evaluated against best practices in caregiving, non-discrimination, the prohibition of sexual harassment, equal opportunity, career advancement, and preferential procurement. Unfortunately, not all managers have such policies in place. Only 37% of participants have policies for preferential procurement, 35% for equal opportunity, 42% address discrimination and harassment, and 37% provide policies for care leave.?

“The absence of DEI policies across much of the industry reflects a considerable gap in its efforts to promote genuinely inclusive and equitable workplaces. Among the managers who submitted their policies, enforcement and comprehensiveness vary, but the overall trajectory reflects a positive trend towards improved governance and policy development,” says Vawda.

While gaps persist in DEI governance and workforce representation, particularly for women and black professionals in senior roles, Vawda believes there is clear progress and a growing commitment to change. The positive trajectory of DEI practices is encouraging, and with sustained effort, the sector can realise its full potential as a truly inclusive space for all.

The 27four DEI Index provides companies with a clear tool to evaluate, benchmark and strengthen their DEI practices, ensuring long-term, positive impacts on both their employees and the economy.? We believe better businesses build a better country. And ultimately, it’s all about the people we serve,” she says.

Download the 27four DEI Index at www.27four.com ?

About 27four

We are a leading financial services group steadfast in our commitment to creating long-term mutual value for our clients and society. We are guided by a set of principles that always places the needs of our clients and communities first. We are constantly seeking new approaches and ideas to deliver future ready solutions. Read more at https://www.27four.com/our-story/ ?