- Sygnia says despite the challenging economic environment, it achieved record half-year financial results in the six months to 31 March 2022.
- Sygnia's after-tax profit jumped 31.5% to R139.1 million and its basic and headline earnings per share also increased by 23.8%.
- The company is attracting more retail investors, thanks to the growing popularity of its ETFs.
Index-tracking asset manager Sygnia reported record profits for the first half of its financial year, which ended on 31 March.
The group's revenue increased 13.4% to R397.4 million while its expenses remained low. Its after-tax profit jumped 31.5% to R139.1 million. The company's basic and headline earnings per share also increased by 23.8% to 92.6 cents.
Sygnia said this "ongoing success" was largely linked to the growth of its assets under management coming from institutional and retail clients. As more investors embrace passive investing for its low costs, Sygnia saw its assets under management and administration rise by 6.1% to R295.3 billion by 31 March. And revenue linked mostly to assets under management (AuM) increased by 10.6%, to R311 million.
And the asset manager said it wasn't just market movements that boosted this. It also scored new business flows.
Sygnia has attracted R241.2 billion from institutional investors, like pension funds, even though it experienced net outflows of R9.2 billion in the six months to end-March. These outflows were seven times bigger than what the company recorded in the six months that ended on 31 March 2021. But it said R7.2 billion of that related to a "mutually agreed termination" with one client.
YOU MIGHT ALSO LIKE | EXPLAINER | What is passive investing?
Outside of institutional investors, Sygnia now manages R54.1 billion in AuM for retail investors, an 18% increase from the R45.7 billion that the company managed at the end of March 2021. Sygnia recorded R3.6 billion net inflows from retail investors in the six months to June 2022.
"At that time, our ever-growing mix of direct and advice-led retail investors stood at 17 700 and 22 200 respectively, approximately 31% more than the 30 500 retail investors at 31 March 2021," wrote Sygnia in the financial results report.
The company said it has also been growing the advisor force to serve the growing retail client base. It increased its relationship with independent financial advisor firms from 636 to 707.Sygnia said apart from its specialist index-tracking unit trusts and umbrella funds, there is growing popularity of its exchange-traded funds (ETFs) among both institutional and retail customers. Its ETFs attracted net inflows of R2.4 billion.
Sygnia Itrix AuM grew to R32.2 billion by 31 March 2022 from R26.9 billion a year earlier, making Sygnia the second-largest provider of ETFs in South Africa, and the largest provider of international ETFs on the JSE.
"This places us in a strong position to attract institutional investors seeking to take advantage of the recent relaxation of exchange controls by means of a passive approach," wrote Sygnia.
Get the biggest business stories emailed to you every weekday.
Go to the Fin24 front page.