South African investors committed R48 billion in net inflows to local collective investment schemes (CIS) in the third quarter of this year, bringing to R137bn the total net inflows for the 12 months to the end of September.
Statistics for the quarter and the year to the end of September, released yesterday by the Association for Savings and Investment South Africa (Asisa), show that the local CIS industry held assets under management of R2.4 trillion, spread across 1 592 portfolios.
Just under half of these assets were held in South African multi-asset portfolios (49 percent), with the rest in South African interest-bearing portfolios (30 percent), South African equity portfolios (18 percent) and real estate portfolios (3 percent).
Sunette Mulder, senior policy adviser at Asisa, says for the past three years investors have firmly favoured interest-bearing portfolios over equities, and this trend continued into the third quarter of this year.
According to Mulder, this is not surprising given that interest-bearing short-term and interest bearing money market portfolios have been topping the performance charts for the one-year and the five-year performance periods to the end of September. Over the 10- and 20-year periods, however, South African equity generally and South African multi-asset high-equity outperformed interest-bearing portfolios.
Interest-bearing portfolios (short-term and variable-term) attracted the bulk of the net annual inflows (R55.2bn), followed by South African multi-asset income portfolios (R51.6bn) and money market portfolios (R32.4bn).
Mulder says it is interesting that multi-asset high-equity portfolios attracted net annual inflows of R8.2bn, while equity general portfolios recorded net annual outflows of R3.8bn. “This could point to investors seeking additional diversification from volatile conditions experienced in the equity markets,” says Mulder.
Mulder says 27 percent of the inflows into the CIS industry in the 12 months to the end of September came directly from investors. However, this does not mean that these investors acted without advice. “We believe that a number of direct investors pay for advice and then directly implement the choice of portfolio,” says Mulder.
Intermediaries contributed 34 percent of new inflows. Linked investment services providers generated 21 percent of sales, and institutional investors, such as pension and provident funds, contributed 18 percent.
Locally registered foreign portfolios that submit information to Asisa held assets under management of R493bn at the end of September, up from the R473bn of the previous quarter. These foreign portfolios recorded net outflows of R9.8bn over the quarter to the end of September.
Foreign-currency portfolios are denominated in currencies such as the dollar, pound, euro and yen, and are offered by foreign unit trust companies. These portfolios can be actively marketed to South African investors only if they are registered with the Financial Sector Conduct Authority. Local investors who want to invest in these portfolios must comply with Reserve Bank regulations and will use their foreign capital allowance.
There are 489 foreign-currency-denominated portfolios on sale in South Africa.