27four Investment Managers
7th May 2015
A Force For Change
Larry Claasen speaks with Fatima Vawda for The Investor, Moneyweb’s monthly investment magazine.
Fatima Vawda has come a long way from the humble “matchbox” house she grew up in Lenasia, Johannesburg.
Vawda now leads her own fund management company – 27four Investment Managers – but she credits a large part of her success to the lessons she learned growing up in Lenasia and to the example set by her single parent mother. “It has not been easy to get where I am. There have been a lot of challenges. But they were challenges we were happy to take.”
Though Vawda started out as a lecturer – she has a degree in Applied Mathematics from Wits University – she said it was a natural move into the financial field when she joined Standard Corporate & Merchant Bank as an interest rate derivatives trader in the mid 1990s.
In 2003 she founded the first black-owned and woman-managed fund of hedge funds in SA, Legae Capital – an indirect subsidiary of Wiphold. But by 2007 she sensed another gap in the market. Many funds were offering similar products and Vawda thought there was room for something different.
Finding the gap
She noticed for instance that few if any firms at the time were looking at investing in Africa or were taking Islamic compliant investments seriously.
Seeing the opportunity, Vawda started 27four. She named it after 27 April 1994, the date of South Africa’s first democratic election as a way to represent the change she wanted to bring to the sector and also as a nod to the country’s history.
Even though Vawda says “being an entrepreneur is in her DNA,” she acknowledges that running her own business is anything but easy. When she started out, she only had one client and the only source of funding were her savings. “I would have lost everything if this business did not work out.”
She recalls how for the first two years some people wanted her to “throw in the towel”. Others however, wanted to offer her funding.
Vawda would not be dissuaded. She would not only stay the course with her business, but also chose not to bring in investors because she assumed having an outside partner would put pressure on the group to produce returns while it was still trying to figure out what works.
The first few years were difficult but then 27four started to make a habit out of producing impressive returns. In 2009 it won the Principal Officers Association Best Manager of Managers award. This was followed by a host of others, including three 2015 Raging Bull Awards.
Vawda says there is no magic formula to the group’s success. It does a lot of research and, using its findings, it then works out how to deliver exceptional returns at a low risk.
This strategy sees the group produce steady, if not spectacular returns, which is exactly what Vawda wants because it fulfils its goal of protecting its clients investments. “We don’t want to be seen as cowboys. We are managing other peoples money.”
Traction in Africa
This cautious approach is finding traction in Africa. Over the last few years the continent’s economic prospects have attracted a lot of attention from institutional investors. According to Bloomberg, nine out of the 20 fastest growing economies in the world for 2015 are expected to be in Africa.
This was not the case when 27four started researching cross-border opportunities seven years ago. The group started looking into African investments before it was fashionable because it wanted to be ahead of the trend and knew if it could do research before its competitors, it would have a significant advantage over them.
Vawda points out that while the continent has a way to go in terms of living up to its potential, investing in Africa is becoming easier and more transparent. For instance there have been big improvements in the management of stock exchanges.
Many exchanges for instance have adopted electronic trading platforms, which have played a part in increasing the liquidity and volume of trades. She notes there has also been an improvement in governance and the overall running of the exchanges.
The upside of these improvements is that they not only make it easier to invest in African-listed businesses, they also provide resilience to the exchanges and African economies as a whole when there is a downturn.
Although 27four is a success by any measure, for Vawda, her business is just as much a driver of change in SA as it is a fund management company. For example, it created the Black Asset Manager Incubation Program as a way to bring more black people into the asset management industry.
Besides supporting transformation with the program, Vawda says the group is an outspoken advocate for change in the sector, especially against parties in the industry that are looking to divert the debate on transformation. She says with so much at stake, she and her company would stand up to larger players who would redirect the discussion to suit their economic interest over bringing more people into the economy.