It should come as no surprise that Magda Wierzycka has handed over day-to-day responsibility for Sygnia to her heir apparent, David Hufton, who has already been joint CEO for about a year.
There is undoubtedly scepticism in the market about her new role as "nonexecutive director". But she says Hufton and the executive team will have complete freedom to do what they consider best, and she won’t be calling the shots from the sidelines — "that is not my style".
Instead, Wierzycka’s plan is to drive the company’s strategy and product innovation.
She and her family will remain the biggest shareholders in the financial services company, with 64% of the stock. "I don’t plan to sell a single Sygnia share," she says.
Prior to Sygnia, which has become steadily synonymous with an array of exchange traded funds (ETFs), Wierzycka headed African Harvest Fund Managers. Before that she led the sales and marketing team at Coronation and was a leading member of Southern Life’s innovative index products team.
Over the past two years she has become a major shareholder in Oxford Sciences Innovation, a venture capital firm financing businesses that commercialise research from the university — including the Oxford Covid vaccine.
Wierzycka, who says she has at least one more start-up in her, is going on sabbatical to New York, not least to learn from her son — an undergraduate at Columbia University — about computer science and artificial intelligence.
She also plans trips to Silicon Valley to get immersed in global technology, and is considering listing a special purpose acquisition company to fund any new ventures that come along down the line. Hufton says there is a clear understanding that Wierzycka will not compete with Sygnia, though she has not signed a restraint of trade.
Sygnia’s listing on the JSE in October 2015 saw an initial boom in the stock.
It came to market at a 61% premium to its IPO price of R8.40, and by April 2016 it had shot up to R22.
But the rally was short-lived and it spent the next four years steadily losing ground. In May 2020, however, Sygnia’s shares began a remarkable turnaround, gaining 154% since then and far outperforming the JSE’s financial services index.
In contrast, asset manager Coronation has rallied 58% while Ninety One has gained only 23% over the same period.
Index funds were disruptive and exciting when Sygnia (then called IQvest) first rolled out its range in 2006, but they’ve become standard investor fare today.
The latest turn for Sygnia has been towards thematic funds, including the phenomenally successful 4th Industrial Revolution Global Equity Fund, which now has more than R2.2bn under management.
This has been followed by a passive emerging-markets product.
Hufton says Sygnia remains focused in SA, but "we have recognised that many South Africans have externalised monies or will be taking money offshore and will be comfortable investing with a familiar brand. So we are setting up some hard currency funds offshore."
While total assets under management hit R251.8bn for the year to end-September, the company still has barely 1% of the SA unit trust market.
The Sygnia umbrella pension fund is the sixth largest in SA after five years, still trailing the long-established players such as Alexander Forbes, Old Mutual and Sanlam.
Sygnia remains a true independent with no in-house sales force or consultants guiding clients towards its products.
But one thing it has in common with the larger fund managers is product complexity.
It runs parallel ranges — Skeleton with passive building blocks (but with active asset allocation) and Signature with a blend of active and passive, at a higher fee.
There are also the vanilla DB X-Trackers global ETFs it bought from Deutsche Bank four years ago and its home-grown thematic funds.
Many companies have a big-picture CEO and a details-orientated COO, but Wierzycka says she feels guilty about wanting to travel and learn while leaving others to do the less glamorous and much harder job of running the company day to day.
"But I am 100% certain that the dynamism of Sygnia will remain. The culture of innovation was built up through the talents and skills of many people."
Hufton, meanwhile, could not have a more different style from his predecessor. He is low profile, and patient when it comes to the tiniest details of management. But he promises that the transition will be seamless as he has worked alongside Wierzycka for three years — first as deputy then as joint CEO.
"I have a deep understanding of Sygnia’s overall operation. [And] we are both clear on my executive role and her ongoing shaping of the company’s strategic direction. I can continue to count on her for counsel when I need it."
Sanlam small-cap analyst San Naidoo says the house continues to hold Sygnia shares.
"We believe the investment case remains attractive despite a strong run in the share price. Regarding the management change, we do not believe that Hufton’s appointment as the sole CEO will herald a significant change in strategy at Sygnia. When he was appointed in 2016 as deputy CEO, we suspected that he might one day take the reins."