South African collective investment schemes, which comprise mainly unit trust funds and exchange traded funds, continue to attract steady net quarterly inflows, a sign that investors seem undeterred by the turbulent political and economic environment.
According to the latest statistics released by the Association for Savings & Investment South Africa (Asisa), the local collective investment schemes industry recorded net inflows of R38 billion in the third quarter of this year. This brings to R138bn the total net inflows for the 12 months to the end of September.
Sunette Mulder, the senior policy adviser at Asisa, says local funds ended the third quarter of this year with assets under management of R2.19 trillion. This represents a growth in assets of more than R100bn from the second quarter. Multi-asset funds held 50% of these assets, interest-bearing funds 26%, equity funds 20% and real estate funds 4%.
Mulder says although net inflows have remained consistently strong over the past five years, with multi-asset portfolios the category of choice, there has been a distinct shift this year towards interest-bearing portfolios. These are funds that invest in bonds and cash instruments.
Mulder says it is not surprising that investors moved into these portfolios, considering that these funds “topped the performance leaderboard” for the 12 months to the end of September.
She points out that, although the average bond and money market portfolios outperformed over the one-year period, funds in the South African multi-asset high equity and South African equity general sub-categories consistently outperformed interest-bearing funds over the five, 10- and 20-year periods to the end of September.
For example, over five years, South African multi-asset high-equity funds returned 10.2% a year, on average, South African equity general funds returned 9.9%, while funds in the South African interest-bearing short term and money market sub-categories returned 6.8% and 6.3% respectively. Inflation over this period averaged 5.5% a year.
Mulder says that 29% of the fund inflows in the 12 months to the end of September came directly from investors, although many of these may have acted on advice from financial advisers.
Intermediaries contributed 26% of new inflows. Linked-investment services providers generated 20% (mostly via intermediaries), and institutional investors, such as pension and provident funds, contributed 25%.
The Asisa figures show that locally registered foreign funds held assets under management of R434bn at the end of September, a R30bn increase from the R403bn managed at the end of June.