#Women'sMonth: Nkareng Siwale's vision for quality investing and sustainability

Source: Supplied. Nkareng Siwale, founder and managing director for RainDance Asset Management.

Her approach, grounded in fundamental analysis and risk management, emphasises long-term value creation. As a female leader in the investment industry, she strives to balance client interests with sustainable practices, setting a precedent for integrating ESG into traditional investment philosophies:

Can you share what inspired you to start RainDance Asset Management and focus on Quality Investing and Sustainability?

When RainDance was founded, we recognised the importance of advancing towards more sustainable economies, both socially and environmentally, while carefully considering the societal impact on all stakeholders.

However, we also believed that our clients’ sustainability interests should not come at the expense of returns. We view the broader concept of ‘ESG’ as an invaluable source of information that has become crucial to the long-term nature of investing. Ignoring it increases the risk of under-performance and heightened portfolio volatility.

We are committed to the belief that the financial sector plays a pivotal role in encouraging and reshaping industries to address and mitigate environmental, social, and economic vulnerabilities.

Our approach is grounded in bottom-up, fundamental analysis, seeking traditional quality assets that meet established sustainability criteria. The reason we integrated quality investing with sustainability is rooted in my extensive background in investment management, particularly within a quality-style investment philosophy.

I identified an opportunity to merge these two approaches, to both emphasise long-term value creation and risk management. Quality-style investing focuses on companies with strong fundamentals, such as consistent cash flow, high return on capital, and resilient business models. These characteristics often align well with sustainable practices, as companies that prioritise ESG factors are better equipped to manage risks, adapt quickly, and maintain their competitive advantage over time.

Our goal is that through this unique approach, we can generate long-term value for shareholders while also engaging management teams in positive and forward-looking conversations.

How does RainDance integrate ESG (Environmental, Social, and Governance) principles into its investment strategies, and what challenges have you faced in implementing these principles?

As mentioned, we believe that integrating sustainability research within a quality-driven fundamental equity analysis process, provides us with additional information that helps us identify management teams alive to longer term risks and opportunities, and enables us to select the types of businesses that will thrive in the longer term.

To achieve this, we have developed an integrated investment process that applies a sustainability lens to systematically assess the material factors impacting a business and the industry in which it operates, developing what we call an ESG-adjusted Weighted Average Cost of Capital (adjusted-WACC).

Traditionally, WACC is calculated by estimating the cost of financing a company’s operations through a weighted average of its various capital sources. However, our process incorporates making material ESG forecast revisions or adjustments to the WACC, with high-probability impacts being better reflected in the company’s forecast financial statements.

Our preferred sustainability approaches include ESG integration and corporate engagement.

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The main challenge in implementing these principles has been the lack of standardisation and consensus in ESG metrics. RainDance addresses this by leveraging global platforms and developing our own sustainability ranking tools.

Another challenge is the measurability and reporting of ESG contributions. We would love to get to a place where we not only demonstrate the portfolio’s attribution from the traditional asset allocation and stock-selection perspective, but are also able to highlight our ESG contribution. This is critical, as the ongoing global debate centres on the true value ESG adds to returns.

If this can be achieved, we believe this could significantly advance the current ESG discourse.

With your extensive background in portfolio management and asset allocation, how do you see the role of women evolving in the investment management industry?

We believe that the role of women in the investment industry is set to evolve significantly as diversity and inclusion take centrestage in business strategies.

Annual surveys tracking gender representation reveal a growing trend of women assuming key roles in decision-making processes. This shift is driving greater female representation across all levels, from fund management to executive leadership, which is essential for promoting change and fostering inclusive growth within the industry.

Looking back over the past 20 to 25 years, women were predominantly found in middle and back-office positions, while the more visible and career-
advancing roles were largely reserved for men.

This evolution is likely to gain further momentum through initiatives like the Africa Women Impact Fund, which is actively committed to supporting female-led investment firms across the continent.

However, to conclude this question I also believe that there is a much bigger discussion to be had around the choice women are faced with, between building a career and building a family. Each choice is significant and should be taken with great care.

Many companies have done well to set up and provide a supportive work environment to enable women to also be mothers, however there is a lack of health and wellness support when it comes to fertility and what a young woman’s choices are in the early stages of their career.

What impact do you believe the grant from the Africa Women Impact Fund will have on RainDance and its mission?

The grant has had a transformative impact on RainDance. Critically for us, we have been able to show strength in our balance sheet which has built confidence in our stakeholders, including asset allocators and regulatory bodies. This has resulted in us landing on a firm foundation for long-term growth.

The award of the grant has firstly shown that we have the backing of a significant organisation such as SBG Securities and the AWIF Foundation (an initiative of the UN Economic Commission for Africa). This kind of endorsement has seen us engage in extremely constructive conversations with asset allocators, potential partners and other interested parties.

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Through this, we should be able to reach a point where we build on our team, broaden our investment solutions and empower the growth and development of women at the inception of their careers.

Can you describe the significance of the partnership between the Africa Women Impact Fund and organisations like SBG Securities in supporting female-led investment firms?

Partnerships between the Africa Women Impact Fund and organisations like SBG Securities are crucial for providing female-led investment firms with access to resources that are often harder to come by in a male-dominated industry. As mentioned, financial support has been the key lever for us.

However, while we understand that we are still in the early stages of the partnership, over time we would like to see the initiative open up networks and the expertise of these two influential institutions, to offer not only financial support but also mentorship, market access, and credibility, which are essential for the growth and success of emerging firms like RainDance.

Such partnerships help bridge the gap between intention and action in promoting gender equality within the investment management sector​.

Given your experience in managing both domestic and international portfolios, how do you balance the need for sustainability with the performance expectations of investors?

Balancing sustainability with performance expectations involves integrating ESG factors into the core investment process, regardless of the type of geographical mandate, ensuring that sustainability does not come at the expense of returns.

RainDance employs a quality investing approach, focusing on companies with strong cash generation, high return-on-capital, and attractive growth opportunities. By incorporating ESG metrics into fundamental analysis, RainDance seeks to identify investments that are not only sustainable but also capable of delivering superior risk-adjusted returns over the long term.

This approach mitigates risks and enhances portfolio resilience, thereby aligning sustainability with investor expectations​.

What advice would you offer to aspiring female asset managers who are looking to make their mark in the industry?

Demonstrating a commitment to life-long learning, coupled with a strong support structure that can advise and guide you as a young woman starting out in the industry will set you apart. As you grow, don’t shy away from leadership roles, or opportunities to swim in new and unchartered waters. Build your voice and never ever forget to send the lift back down.