On top of this, the fund has a strong reputation for successful dealmaking, achieved through buying underperforming assets and eventually selling them to funds willing to pay up for mature assets. This does good things for shareholder returns.

The recent performance is impressive, with the rent roll up 7.2% on a like-for-like basis for the year ended March 2024. It’s little wonder that the market supported a capital raise of €165-million recently.

Sirius also sold properties worth €51-million in the second half of the financial year, all at prices at or above book value. Being able to recycle capital at decent asset prices is important in property funds.

Any property investor should be worried about the higher-for-longer environment we find ourselves in for interest rates. The good news at Sirius is that there are no major debt maturities until June 2026, so the company still has a few years of cheap debt to enjoy.

This performance is why the share price is up 30% in the past year. Just be careful of getting carried away here, as the share price is still nearly 30% off the crazy peaks right at the end of 2021. Even a property fund isn’t immune to a hype bubble.

In asset management, distribution is key

Ninety One has released an update on its assets under management (AUM). Admittedly measured in GBP rather than ZAR, it could only limp 2.6% higher over 12 months. This explains why the share price is down roughly 4% in the past year.

Conversely, the share price of PSG Financial Services (previously PSG Konsult) is up nearly 15% over the same period. You don’t have to look too hard to find out why, with AUM up by 15% for the year ended February 2024. This is measured in ZAR rather than GBP, but then again the cost base is also in ZAR.

The offshore nature of Ninety One didn’t save its share price over the past year either. Look past the currency differences here.

Within PSG, the PSG Asset Management business could only manage a 1% increase in headline earnings, with the star of the show being PSG Wealth and its earnings growth of 17%. This leads to the important lesson that I take from this: distribution is critical in this game.

Following an advice-led model gives PSG the ability to earn advice fees, while enjoying a much better chance of growing AUM in the funds as well. With so much pressure on fees in the asset management industry, I would only ever consider a position in a group that has strong distribution. Without that, there really isn’t much of a moat.

Purple Group gets unit economics right

The introduction of account fees at EasyEquities (even nicely packed in a “Thrive” wrapper and with the option not to incur them through positive behaviour) raised plenty of ire on social media. As is so often the case, the outrage didn’t translate into financial problems for the company. In fact, the business looks better than ever, which means Purple Group’s share price has reversed the negative momentum.

Ignore the noise online and focus on the key metrics, like active clients at Easy Group up 12.5% for the interim period and revenue up 34.9%. The improvement in revenue per client is coming through in the non-activity-based revenue line, which is where you’ll find the account fees. This has helped EasyEquities to swing from a loss to a profit.

Thanks to this vast improvement in the unit economics (the profit made per customer), Purple Group’s share price is up a whopping 42% in the past month. It’s still miles off the pandemic silliness, but the business is really coming into its own now. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.