In 2004, Kokkie Kooyman launched two global equity funds: the Denker Global Financial Fund and the Denker Global Equity Fund. This year, we celebrate 20 years of successfully managing global portfolios from Cape Town – an achievement we are truly proud of. The funds, now managed by Kokkie Kooyman and Jacobus Oosthuizen respectively, have delivered meaningful returns to investors over the last two decades, and continue to do so.
In this piece, Kokkie reflects on the journey that has brought us here, shares lessons learned (in blue) and looks to the future.
The journey to the launch of our global equity strategies started in the 1990s.
This was when I first started looking beyond South Africa, to research banks in the emerging Asian Tiger markets (Korea, Hong Kong, Thailand, Indonesia and the Philippines). At the time, I was working for Old Mutual Asset Managers, and we were tasked with putting together a model portfolio of Asian Tiger stocks for a global fund which was being managed from London. After my first trip to visit some of the banks in the Asian countries, it was difficult to go back to researching SA banks only. Increasingly, I spent more time comparing SA banks to Asian banks.
So, in 1998 I was asked to join Coronation to head up the financials team, I said “Yes, but only if you also give me the opportunity to start a global financial fund.” Looking back, this was a brave time to launch a global financials fund because emerging markets were collapsing. Then, in September 1999 – with Y2K looming, the dotcom bubble bursting and emerging markets very much down and seemingly un-investable – we launched the Coronation Global Financial Fund.
Right at the beginning we learnt a valuable lesson: Invest when markets are fearful.The timing was perfect. The fund outperformed from the beginning and had five great years. Despite the success, the thinking of the main decision makers at Coronation was that global funds couldn’t really be managed from Cape Town (remember, data was not readily available or easily accessible in those days) and that SA investors would always prefer to invest in global funds with offshore based managers as opposed to local ones.
At the end of 2003, Johan van der Merwe (then CEO of Sanlam Investment Managers (SIM)) approached me to start a global unit for SIM to complement their local offering. I made an appointment to see Johan van Zyl (then CEO of Sanlam Group) to talk about this new venture and to make sure it had the Sanlam Board’s blessing. Both Johan’s convinced me that this was part of a longer-term strategy. Funnily enough, I first met Johan van Zyl after he was appointed as Sanlam’s CEO, and I’d shared on RSG radio that his lack of experience in insurance – particularly in life insurance – made his appointment a ‘high risk’ one. I compared it to appointing Naas Botha to manage the Proteas, who were going through a slump! Needless to say, Johan proved me wrong.
Leaving Coronation was a difficult decision. I think we had the best financials team in SA at that stage and the performance stats confirmed this. But I’d committed to Sanlam and the vision of building a long-term global strategy. On 1 April 2004 I moved to SIM with Laura Ford, an equity analyst on the team who was keen to move with me from Coronation. Coronation had graciously allowed us to give the investors the option of moving to the new fund at Sanlam or switching to an alternative Coronation fund. It so happened that all but one of the investors decided to come across.
In 2004, our two global funds were launched.
The timing of setting up the Denker Global Financial Fund (then called the Sanlam Global Financial Fund) was good. We had a few golden years (particularly from 2004 to 2006). In the same year, we launched the Denker Global Equity Fund (then called the Sanlam Global Best Ideas Fund) as part of a journey to build a global investment unit for Sanlam. Both funds performed well and within three years the two funds had almost $1 bn under management.
Since then, there have been many notable market events: from the 2008 US housing bubble and global financial crisis to the European sovereign debt crisis (PIIGS), the oil crisis of 2015, quantitative easing, negative interest rates, and most recently, the impact of Covid-19 and Russia’s invasion of Ukraine. With these big events came valuable lessons:
- each crisis brings significant market corrections and presents good buying opportunities,
- well-managed banks and insurers typically emerge from these storms stronger, and
- ‘knowing thy companies’ is essential to having the conviction to stay invested in these businesses during turbulent times.
Looking back, I realise now that it takes a long time to build a sustainable asset management business.
It has been 20 years since the day I walked into an empty room to start SIM Global. Since then, we’ve grown from just a few members into what is now Denker Capital – with a strong and experienced team of portfolio managers and analysts covering SA and global markets, a dedicated CEO, and leaders across our operations, business development and marketing functions. It’s taken 20 years to build a team capable of the work we’re doing now, and I’m grateful for the commitment and expertise each person brings.
The success we have now wouldn’t have been possible without the support of many individuals who played a role along the way. I’m grateful for the investors in our global funds – whether they’ve been invested for 20 years or much shorter. Looking at the performance since inception, it is a real eye opener to see the wealth that can be created with regular investments that compound at a good rate.
As the charts below show, the returns have been good.
Denker Global Financial Fund:
The charts below show the performance since the inception of the Denker Global Financial Fund in 2004. However, if you look at the combined numbers since inception of the Coronation fund, they’re even more impressive:
- $1 m invested on 1 October 1999 would now be worth $18.2 m (vs. the S&P 500’s $6.7 m and the MSCI World’s $4.9 m) – equating to a compound annual growth rate of 12.3% in USD over 25 years.
- In rand it looks even better: R1 m would be R51 m today, vs. R19.0 m from the S&P 500.
Figure 1: Cumulative performance since inception – 30 September 2024 
Source: Morningstar, Denker Capital. Returns are net of the A class fees of 1.25%. Inception date of class: 5 October 2004.
Figure 2: Annualised performance since inception – 30 September 2024
Source: Morningstar, Denker Capital. Returns are net of the A class fees of 1.25%. Returns for periods shorter than one year are cumulative. Inception date of class: 5 October 2004. The highest annual return in the last 10 years was 29.7% and the lowest was -17.2%. These are based on a calendar year period over 10 years.
*Morningstar category: EAA OE Sector Equity Financial Services. Category ranks are based on returns gross of fees, using oldest fee classes.
I believe the reason for the outperformance is a combination of passion and enjoyment in seeking opportunities, plus the love of data. Over the years, Laura Ford and Liesl Basson (who is still with the team today) built models allowing us to delve into the history of about 400 financial companies around the world and compare them with each other. This data has given us a huge edge over competitors.
We once did an Indian banks trip with FirstRand. At a few meetings Kees Bruggemans (the Chief Economist at FirstRand at the time) sat behind me and was looking at my spreadsheets and the information I had on each bank as I was asking them questions. He said to me afterwards: “These guys have no idea of the amount of the amount of information you have on them.”
I think what has helped us generate these returns has been our ability to find future winners (honed by making the sector our circle of competence), to name a few:
- Wells Fargo, when Dick Kovacevich was still expending the San Francisco-based lender across the US (1998 – 2007)
- Shiram Transport Finance and Shiram City Union Finance (SCUF) – compound annual growth rate of 34% over 20 years (in rupees). My claim to fame on this one has been that we were invested in Shriram before Johan van Zyl and Heinie Werth (CEO of Sanlam Emerging Markets) found it.
- TSKB in Turkey
- Tinkoff Credit Services, the Capitec of Russia
Denker Global Equity Fund:
The Denker Global Equity Fund started later in 2004 and also performed well. Within the first five years it was number one in the world over three years. Another lesson: When it comes to long-term performance, you don’t want to be number one all the time. If you are, it shows you’re taking too much ‘one directional’ risk.
The Denker Global Equity Fund has been managed by Jacobus Oosthuizen, who started as an analyst on my team in 2006, for almost four years now. Jacobus and his team have gradually rebuilt the performance after a tough period – slowly, incrementally and conservatively building up an excellent track record. The fund is now regularly ranked in the top 10% globally (competing against more than 1,500 funds)… but never first!
Figure 3: Annualised performance since inception – 30 September 2024
Source: Morningstar, Denker Capital. Returns are net of the A class fees of 1.5%. Returns for periods shorter than one year are cumulative. Inception date: 2 September 2004. The highest annual return in the last 10 years was 24.4% and the lowest was –15.5%. These are based on a calendar year period over 10 years.
Morningstar category: EAA OE Global Large-Cap Blend Equity. Category ranks based on returns gross of fees, using oldest fee classes.
As the manager of the Denker Global Financial Fund, I’m excited about the future.
The financial sector is finally poised for its turn to shine.
We’re going into a great environment for financials (more stability, lower bad debts and wider net interest margins). But even if the environment doesn’t pan out as hoped, the team is ready to pounce on opportunities the next market correction brings.
Our investment team has built an incredible database of companies around the world. Through this database we continue to gain knowledge and insights. Equity analysts, Ben and Barry, have been in the financials team for 10 years and understand the detail better than I do. Every time I attend meetings with management teams of the large (and small) banks and insurers – like AIG, Barclays, Legal and General and HSBC – I am proud of our team and how good they are at what they do. I know of very few teams who know as many financial companies across the globe as we do (banks, insurers, exchanges, debt collectors, etc. – in developed and emerging markets), and who have the historical perspective we have at Denker Capital.
The team has unparalleled knowledge of global financials and is well-equipped for whatever the future holds. We’re optimistic about the future of the financial sector, particularly as the environment stabilizes and opportunities arise. But even if markets stumble, our team will be ready to navigate any challenges.
As for me, as I think about the future, I can’t help but recall Charlie Munger’s famous words when he was 84 years old.
“Why is an old man giving this speech? Because he’s not dead yet!” After that speech, Munger continued as deputy CEO of Berkshire Hathaway, alongside Warren Buffett, for a further 15 years. Munger’s longevity in the field has always been a source of inspiration, reminding us that as long as we continue to find joy and meaning in our work, we should keep going. I intend to keep contributing for as long as that joy remains.
To our investors and supporters: Thank you for your unwavering support and belief in what we do.
You have been a crucial part of our journey, and I’m thrilled to celebrate this milestone alongside you. Here’s to the next 20 years!
Disclosure
The Denker Global Equity Fund and Denker Global Financial Fund are sub-funds of Sanlam Universal Funds Plc, a company incorporated with limited liability as an open-ended umbrella investment company with variable capital and segregated liability between sub-funds under the laws of Ireland and authorised by the Central Bank. The Manager of the fund is Sanlam Asset Management (Ireland) Limited (Beech House, Beech Hill Road, Dublin 4, Ireland, Tel + 353 1 205 3510, Fax + 353 1 205 3521) which is authorised by the Central Bank of Ireland, as a UCITS Management Company, and an Alternative Investment Fund Manager, and licensed as a Financial Service Provider in terms of Section 8 of the FAIS Act. Sanlam Collective Investments (RF) (Pty) Ltd is the South African Representative Office for these funds. Deemed authorised and regulated by the Financial Conduct Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website (notes 1, 3 and 4). The A class of each fund is the most expensive class. The Sanlam Universal Funds Plc full prospectus, the fund supplement, the minimum disclosure document (MDD) and the KIID are available free of charge from the Manager or at www.sanlam.ie. This is neither an offer to sell, nor a solicitation to buy any securities in any fund managed by us. Any offering is made only pursuant to the relevant offering document, together with the current financial statements of the relevant fund, and the relevant subscription/application forms, all of which must be read in their entirety together with the Sanlam Universal Funds Plc prospectus, the fund supplement the MDD and the KIID. No offer to purchase securities will be made or accepted prior to receipt by the offeree of these documents, and the completion of all appropriate documentation. A schedule of fees and charges and maximum commissions is available on request from the Manager.
Collective investment schemes are generally medium- to long-term investments. Past performance is not necessarily a guide to future performance, and that the value of investments/units/unit trusts may go down as well as up. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Additional information on the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the Manager, free of charge. Forward pricing is used. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Performance is based on NAV-to-NAV calculations with income reinvestments done on the ex-div date. Performance is calculated for the portfolio and the individual investor performance may differ as a result of initial fees, actual investment date, date of reinvestment and dividend withholding tax. Lump sum investment performances are being quoted. The performance of the portfolio depends on the underlying assets and variable market factors.
Collective investments are calculated on a net asset value basis, which is the total market value of all assets in the portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. The manager has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate. Funds that hold assets in foreign countries could be exposed to the following risks regarding potential constraints on liquidity and the repatriation of funds: macroeconomic, political, foreign exchange, tax, settlement and potential limitations on the availability of market information.
Returns are annualised and net of fees unless otherwise stated. An annualised return is the weighted average compound growth rate over the performance period measured.
