THE Public Investment Corporation (PIC), SA's largest investment manager, said yesterday it was re-examining how it would allocate cash to asset managers as part of its multimanagement process.

The PIC, which manages more than R1-trillion on behalf of the Government Employees Pension Fund (GEPF), has about 20 external asset managers and the reshuffle will see some of these institutions gain or even lose some of the cash allocated by the PIC.

The mandates from the PIC are the key to their livelihoods as the external asset managers receive management fees that amount to millions of rand.

The PIC is significantly invested in listed equities, with 25% of this portfolio managed by external asset managers, while 75% of its portfolio is managed internally. Asset managers with mandates from the PIC include Stanlib, Old Mutual, Coronation, Kagiso and Sanlam Investment.

Some of the 20 asset managers are at risk of losing mandates.

Stanlib reportedly manages about R2bn on behalf of the PIC. Previously it managed about R9bn. But two years ago, due to internal issues at Stanlib, the PIC significantly reduced mandates with the asset manager.

Thabo Dloti was appointed CEO of Stanlib to stabilise the Liberty-owned asset manager.

In a results presentation last year, Mr Dloti said Stanlib had been stabilised and was working to regain the mandates it lost.

Sanlam Investment Management said it was waiting for formal correspondence from the PIC on this matter and was unable to comment at this stage.

The PIC declined to reveal who would lose or gain.

"The manager reshuffle is part and parcel of the multimanagement process. Managers will be given more assets or have some or all the assets taken away as part of the multimanaged portfolio rebalancing process," Maqhawe Dlamini of the PIC said.

"The rebalancing decision is driven by the portfolio profile that suits a certain economic environment. Managers with investment mandates or styles that are deemed not in favour in an investment climate will lose some or all of their assets."

Mr Dlamini said asset managers that had underperformed over a predetermined review period would lose assets.

Asset managers that did not stick to the mandate requirements such as tracking error discipline were also going to lose assets as this interfered with the portfolio risk budget, Mr Dlamini said.

Tracking error compares the return of the portfolio compared to its benchmark.

Asked about the implications for black asset managers, the PIC said it supported black enterprise development, but their performance would also be reviewed.

"The managers grossly under-performing their targets would also be replaced with other black managers that our multimanagement intelligence system tracks over time," Mr Dlamini said.