BLUECHIP2025 DFM GUIDE -
BLUECHIP2025 DFM GUIDE - PROFILEEquilibrium InvestmentManagementMeet the Equilibrium teamEquilibrium Investment Managementis an independent discretionaryfund manager which was founded in2008. Located in Centurion, Gauteng,Equilibrium is a wholly owned subsidiaryof Momentum Group Limited and workswith local and global financial advisorsand wealth managers (local are bothCat I and Cat II licensed financial advisors).With approximately 100 advisors withintheir network, Equilibrium deals withR31.5-billion locally and R2-billion globally.PhilosophyWe tailor investment solutions that areclosely aligned with our clients’ financialneeds and not arbitrary benchmarks. Ouroutcome-based philosophy means ourportfolios are constructed and managedbased on a three-tiered approach:• We define a time horizon;• We determine an acceptable level of risk;• We deduce a reasonable return target;• We set acceptable levels of risk oracceptable negative returns with financialadvisors to reduce the impact of anybehaviour tax on clients’ investments.Implications for financial planners andtheir clientsOur understanding of both the investmentmanagement industry and the financialadvice process allows us to narrow thegap between investments and advice.In essence, Equilibrium becomes anextension of a financial advisor’s practice.Processes at EquilibriumProcess to develop and implementinvestment solutionsOur investment solutions aim to achievethe desired outcomes and increase theprobability of delivering the portfolio’sobjective. Our portfolio construction22process attains equilibrium using threemain steps:1. Firstly, we determine the optimalstrategic asset allocation.2. Then, we use the optimal combinationof investment styles.Florbela Yates - Managing Director3. Our final step is to identify the optimalblend of managers or mandates to executeon the above.Process for servicing financialplanners/clientsThe success of our business hinges onexceptional service and a strongoperational capability. How we goabout becoming trusted partners toour clients:1. We streamline an advisor’s workflow,allowing them to dedicate more timeto clients.2. We foster open communicationand create a fertile environment forcollaboration.Perspective on performanceLooking at a snapshot of investmentreturns within our standard portfolios,the Conservative, Stable, Moderate andBalanced portfolios have been well aheadFrom left standing: Nomathamsanqa Khoza - Portfolio Manager, Thokozani Zwane - Investment Analyst,Mersey Booysen - Investment Operations Manager, Nontobeko Mabaso - Investment Administrator,Methula Sikakana - Business Development Manager, Riaan Bosch - Portfolio Manager, Kamini Naidoo - Chief Investment OfficerFrom left sitting: Rupert Giessing - Portfolio Manager, Pat Magadla - Head of Distribution, Bongekile Sithole - Executive Assistant,of their respective benchmarks over one,three, four, five and six-year time horizons.Over the seven-year time horizon, theGrowth and Unconstrained portfolios wereslightly under pressure and lagged theirbenchmarks, mainly due to the significantlyhigher return target of CPI + 6%. Pleasingly,we are still ahead of our peer group.Contact information:For more details contact:• Pat Magadla• Telephone: 082 880 4581• Email: pat.magadla@eqinvest.co.za• Website:www.equilibriuminvest.co.zaEquilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised financial services provider(FSP32726) and part of Momentum Group Limited, rated B-BBEE level 1
2025 DFM GUIDE - INTERVIEWBLUECHIPImproved balance in your practiceFlorbela Yates, Managing Director of Equilibrium, speaks about thecurrent DFM landscape and the status of her organisation.What makes your business distinctive?Equilibrium Investment Management is anadvice-led business. As a DFM and multi-manager,we aim to bridge the gap between investmentsand advice by building portfolios that are alignedwith the advisor’s advice processes, ensuring thatthrough our collaborations we get clients to theirinvestment outcomes. Although we have a rangeof portfolios that reflect our best investmentview, we are able to customise portfolios forclients who are looking for different outcomes orwho want to be involved in some of the decisionsaround managers.Who is your ideal client?Our clients are both financial advisors and endinvestors, although our primary relationship iswith the advisor. Our solutions differ dependingon whether the advisor holds a Category Ior Category II licence under the FAIS Act.Category I advisors would use our fulldiscretionary ability to build and manageportfolios that aim to get investors to aparticular outcome over a particular timeframe. For advisors with a Category II licence, wemainly act in a sub-investment advisory capacity,constructing and managing portfolios accordingto Category II’s defined investment process.What role do you believe DFMs play inimproving client outcomes?By aligning the portfolio outcomes or benchmarksto the outcomes that advisors have agreed withtheir clients, DFMs like ourselves are betterable to partner with advisors to get their jointclients to the identified targets, rather thaninvesting in portfolios with a peer group orother arbitrary benchmark that may or may notbe aligned to what the client wants to achieve.DFMs offer risk management services, balancingpotential drawdowns against outcomesprobability, resulting in less volatile portfolios.This is crucial for conservative investors, asit helps clients remain invested through themarket cycle, reducing the need for markettiming. Equilibrium, as an asset gatherer,leverages preferential pricing from underlyingmanagers, delivering cost savings to clients,which may often lead to superior returnsover time.Some have the view that DFMs should haveperformance tables like fund managers.Your perspective?Advisors don’t only come to a DFM for performance,but also for other practice management benefits.DFMs should be held accountable for performancein the same way that any other asset manageris. DFM performance is difficult to measure inpublic surveys due to model portfolios and thecomplexity of managing bespoke solutions forselect clients. Clients should compare potentialDFMs for investment skills and desired outcomes.Independent providers are conducting surveys tomake it easier to compare DFMs, despite the DFMindustry being relatively new. However, potentialinvestors should verify surveys' credibility,understand portfolio differences and compareactual performance with benchmarks and peergroups.What are the biggest challenges you seefacing DFMs in the next decade?The South African DFM market is saturated andcompetitive, with new entrants often discountingfees to attract assets. Larger players with sufficientscale can negotiate better prices and avoidfee pressure, especially during cycles of poormarket performance. As the industry matures,differentiation of products is expected, withDFMs offering model portfolios and CIS funds.Consolidation is expected to increase, and productsuites may differentiate, with providers focusingon TICs, offering passive and smart-beta solutionsand those with a broad skill set branching out intoalternatives and offshore portfolios.The offering for tied agents is likely to havemore vertically integrated solutions whereas DFMswho want to continue to attract independentfinancial advisors as clients, will need to showthat they are independent in their managerselection process. The shift towards networks willcontinue to scale, with DFMs demonstrating goodperformance and aligning with advice processesgrowing, while those lacking assets may beabsorbed by larger providers.Florbela Yates, ManagingDirector, EquilibriumBIOGRAPHYFlorbela Yates is the head ofEquilibrium in the MomentumMetropolitan group. Equilibriumis an independent discretionaryfund manager that partners withfinancial advisors to help themenable their advice outcomes.Equilibrium brings balance toan advice practice by deliveringservices and investment solutionsto help clients achieve theirdefined investment goals.23
