Surging growth in asset management, Walter Aylett reflects on Quilter, 91, and WeBuyCars
Walter Aylett, founder of Aylett & Co., discusses Quilter's growth, 91's struggles, and WeBuyCars' rise, while emphasizing long-term investment strategies and cautious optimism about South Africa's economic recovery.
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By BizNews reporter
In a recent interview on BizNews Briefing with Alec Hogg, Walter Aylett, founder of Aylett & Co. Fund Managers, provided valuable insights into the financial markets, particularly focusing on the impressive performance of Quilter, the challenges faced by 91, and the rise of WeBuyCars. Aylett, a seasoned expert in asset management, shared his perspective on current trends and the strategic decisions driving his fund's success.
Aylett & Co. has enjoyed significant inflows over the past three quarters, with figures soaring from £800 million to a remarkable £1.5 billion in the most recent quarter. This growth contrasts sharply with the performance of 91, a major asset manager in both South Africa and London, which has faced net outflows in recent months. While 91 has struggled, Aylett attributed Quilter's resurgence to strategic moves following its separation from Old Mutual in 2016. He acknowledged that while both firms operate in London and are of a similar size, their trajectories have diverged significantly.
"I visited Quilter twice in London and was impressed with their management," Aylett said. "We were fortunate to buy into St. James, which operates on a slightly different model but has also shown strong growth." He expressed optimism about Quilter's future but noted that comparing it directly with 91 might not be entirely fair, given the differences in their business models. Aylett highlighted that 91 is more exposed to emerging market inflows and fixed interest, sectors that have been particularly volatile.
One of the most intriguing parts of the discussion was Aylett's thoughts on WeBuyCars, a company that has been a standout performer in recent months. "WeBuyCars is up 16% this month alone, and while the numbers look strong, it feels like there's more optimism than substance driving the price," he remarked. He emphasized the importance of being cautious, especially when a company's share price rises sharply. However, he believes the long-term prospects for WeBuyCars remain positive, despite some concerns about the sustainability of its rapid growth.
Aylett also touched on the broader challenges of asset management, particularly the temptation to take profits too early. "The danger is that you pull out the roses and leave the weeds in your portfolio," he warned. For long-term investors like Aylett, the focus remains on finding value and holding onto strong performers unless there is a pressing need to sell. "If you've got a good company, why sell it?" he asked rhetorically. His fund's philosophy is to limit turnover, with an annual churn rate of just 10%.
Reflecting on the impact of the COVID-19 pandemic, Aylett shared that 2020 was an unusual year in terms of portfolio adjustments. "We turned over a lot more in that year because there was just so much happening," he explained. The pandemic created opportunities to buy companies that had previously been out of reach, and Aylett's firm was well-positioned with cash to capitalize on those opportunities.
Looking ahead, Aylett expressed cautious optimism about the South African economy. He acknowledged the growing interest from foreign investors, particularly in the property market, but warned that it's still early days. "We still need a few interest rate cuts to work through the system," he said, adding that while there are signs of improvement, it will take time for the economy to fully recover.
In conclusion, Walter Aylett's insights offer a valuable perspective on the current state of asset management, both locally and internationally. His firm's disciplined approach to investing, combined with a keen eye for value, has clearly paid off in recent quarters. As South Africa continues to navigate economic challenges, Aylett's measured optimism provides hope for both investors and the broader market.
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