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Quarterly Update – assets under management and administration, and the Sygnia Itrix strategy
SYGNIA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2007/025416/06)
JSE share code: SYG
ISIN: ZAE000208815
("Sygnia" or the "Company")
QUARTERLY UPDATE – ASSETS UNDER MANAGEMENT AND ADMINISTRATION, AND
THE SYGNIA ITRIX STRATEGY
Shareholders are advised that Sygnia Limited’s total assets under management and
administration as at 30 June 2017 were R162 billion (31 March: R159 billion).
The quarter to 30 June 2017 has been a turbulent one as political uncertainty weighs on
economic fundamentals and investment returns.
Despite that, Sygnia grew its assets under management from R159 billion as at 31 March
2017 to R162 billion as at 30 June 2017, largely on the back of institutional appointments. In
addition, we have secured R3.7 billion in institutional investment administration and asset
management appointments which are expected to move to Sygnia in the third quarter of 2017,
as well as a further R2.4 billion in Sygnia Umbrella Retirement Fund’s (“SURF”) appointments
which, subject to regulatory approval, will transfer to SURF during the course of the third and
fourth quarters of 2017.
All areas of the business are progressing well, with SURF becoming a major source of new
asset management appointments for Sygnia. Our “independent consultant friendly” business
model, our highly advanced technology platform and the fund’s superior benefit design have
made SURF a highly attractive proposition for both stand-alone retirement funds, as well as
participating employers in existing umbrella fund arrangements. We also continue to look for
strategic acquisitions in this area.
The acquisition of db X-trackers (RF) Proprietary Limited added another R12.0 billion to assets
under management with effect from 1 July 2017 and is significantly earnings-enhancing to
Sygnia. The transfer of this business has progressed well, with most systems development
processes completed. We expect to unlock more value from the acquisition by restructuring
some of the outsourced services in due course. Although more competitors are emerging,
offering ETFs referencing foreign assets, most are feeder fund structures rather than directly
managed ETFs. Moreover, the db X-tracker ETFs enjoy the advantage of a tiered
management fee structure which means that large investors pay significantly lower
management fees than what may appear in published total expense ratio calculations, which
must show the highest fees, which are those payable by the smallest investors.
The corresponding systems development for our linked investment service provider (“LISP”)
administration platform now allows Sygnia to offer retail investor access not only to the db X-
tracker ETFs, but also to all exchange traded funds (“ETFs”) listed on the JSE. Once again,
we have launched that service at the lowest cost in South Africa with the aim of attracting
investors from competing platforms. For direct stockbroking clients, Sygnia Securities offers
access to ETFs at the lowest brokerage rates in South Africa, competing directly with other
low-cost stockbroking companies.
db X-tracker ETFs will be rebranded to Sygnia Itrix ETFs as soon as possible.
We also intend to broaden the range of ETFs on offer, with the launch of both additional
offshore ETFs and domestic ETFs planned for the third quarter of 2017. This will include the
Sygnia Itrix 4th Industrial Revolution Kensho ETF which tracks an index comprising companies
involved in the development of products and services in the fields of 3D printing, drone
technologies, quantum computing and autonomous vehicles among others. All these products
will be launched at the lowest management and platform fees available, so as to lower the
cost of access to the ETF market for both retail and institutional investors, and to make that
segment of the market more appealing to investors interested in index-tracking investment
strategies.
We do expect to incur higher marketing expenses related to the launching and promoting of
Sygnia Itrix ETFs, as well as in having undertaken a broad rebranding of Sygnia, which is
designed to position Sygnia as a more consumer-friendly brand.
11 July 2017
Sponsor
Nedbank Corporate and Investment Banking
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