In today’s world, globalisation touches every aspect of life—from the products we use daily, to the devices and technology that power our lives. Globalisation isn’t just happening in far-off countries; it's right here in South Africa, shaping the future of every industry—including asset management. At a recent presentation at the IRFA conference, I shared how globalisation affects us all. I woke up in a bed manufactured in one country, used a phone designed in California and made in China, and watched a TV from Korea. This is the global reality, and now it has arrived to reshape the investment industry too.
Much like what happened in the UK, South African asset managers are now feeling the long reach of globalisation. If they want to thrive and meet their clients' long-term goals, they must pivot to evolve into global managers. The local asset management industry can no longer rely solely on South African markets, particularly with the shrinking of the JSE and the increasing offshore returns generated by local companies. To remain relevant, South African managers must embrace global strategies, adopt new technologies, and build processes that allow them to compete on a global scale.
Why globalisation has changed the game
Historically, South African asset managers focused on local opportunities, but the global investment landscape has shifted dramatically. Regulation 28, which increased the offshore investment limits for local pension funds, has opened up vast new opportunities for South African managers. With R4.6 trillion in assets under management, this increase allows over R2 trillion to be invested in overseas markets. This trend mirrors what happened in the UK, where local pension funds gradually reduced their home bias as the domestic market shrank.
For South African managers, the message is clear: to survive in this globalised world, they must transform into global players. Just as globalisation has impacted our daily lives, it has also created new expectations for investors. Clients are no longer satisfied with purely local investments—they want access to global markets and the opportunities they present. This is especially important as the JSE continues to shrink, and the majority of its earnings are generated outside of South Africa. Globalisation has come to asset management, and South African managers must adapt, or risk being left behind.
The role of quantitative strategies in a global world
At Old Mutual Investment Group, we have embraced this global shift by implementing a global systematic approach to investing. This data-driven, quantitative strategy allows us to evaluate a broad universe of stocks from around the world, eliminating the emotional biases that often affect traditional investment methods. With a focus on factors like volatility, growth, quality, momentum, value, and size, our systematic approach has allowed us to compete and consistently outperform global benchmarks.
Our Global Managed Alpha Fund is a prime example of how this strategy works in practice. Despite the challenges of recent emerging market underperformance, our stock selection has added value, demonstrating that a global approach—including emerging markets—can deliver alpha. By taking a data-centric view of the global universe, we’ve been able to position ourselves to capture opportunities that would otherwise be missed by focusing solely on local investments.
Building a global manager for the future
South African managers must now look beyond local borders to deliver the best outcomes for their clients. The changing regulatory environment, combined with the shrinking opportunities within the domestic market, means that going global is no longer optional—it’s a necessity. At Old Mutual, we have shown that by adopting a systematic, quantitative approach, it is possible not only to compete but to thrive in a globalized world. We have developed scalable processes and invested in the right talent to ensure that our strategies remain competitive on a global stage.
As South Africa follows the UK’s trajectory of reduced home bias and increased reliance on offshore earnings, local managers must evolve into global managers. We believe that through innovation, data-driven strategies, and a willingness to embrace global opportunities, South African managers can continue to deliver value and outperform in this highly competitive space. Globalisation has changed the rules of the game, and it is up to us to ensure we stay ahead.