How did South African collective fund investors invest their monies in 2009? Gareth Stocks, editor of FA News Online, investigated:
The Collective Investment Schemes (CIS) industry achieved record net capital inflows in 2009. Investors affirmed their confidence in the industry by pouring R96bn into the available unit trust fund categories. We attended the Association of Savings and Investments SA (ASISA) CIS statistics presentation. ASISA chief executive Leon Campher addressed the media on 3 February 2010.
Assets under management in the CIS industry topped R786bn at 31 December 2009 in some 904 funds. As part of the ongoing refinement of CIS statistics future reports will eliminate double counting by stripping out Fund of Funds and Hybrid funds. The new methodology reduces the assets under management in the industry to R750bn.
Money market funds account for the bulk of domestic assets (33%), followed by equity (24%), prudential (21%) and fixed interest varied specialist (12%). “Money market, although declining, on a relative basis remains a large portion of the assets in the CIS industry,” said Campher. He noted that the prudential category included asset allocation unit trusts which have grown in popularity in recent years.
Money market funds account for the bulk of domestic assets (33%), followed by equity (24%), prudential (21%) and fixed interest varied specialist (12%). “Money market, although declining, on a relative basis remains a large portion of the assets in the CIS industry,” said Campher. He noted that the prudential category included asset allocation unit trusts which have grown in popularity in recent years.
There were some significant changes in the per-category capital flows. This was the first year since 2005 that equities experienced a net inflow for the calendar year. Investors backed equity unit trusts to the tune of R10.8bn. “It’s quite encouraging to see equity positive again,” said Campher. Even so, equity inflows were dwarfed by the R47.6bn that poured into money market and fixed income funds. The prudential category attracted R31bn! “Investors are leaving the asset allocation decisions to fund managers,” said Campher.
Positions one, two and three were occupied by money market funds Absa Money Market (R55.298bn), Standard Bank Money Market (R37.594bn) and Prudential Money Market (R34.644bn). One of the country’s most popular management companies, Allan Gray, had three funds in the top 10 with R84bn under management! Campher noted that Allan Gray – with only eight funds – proved that success in the CIS industry wasn’t linked to a multitude of different product offerings. “You don’t have to launch a new fund every two weeks to try and make money,” he said, adding that the industry was working to address the proliferation of funds.
Positions one, two and three were occupied by money market funds Absa Money Market (R55.298bn), Standard Bank Money Market (R37.594bn) and Prudential Money Market (R34.644bn). One of the country’s most popular management companies, Allan Gray, had three funds in the top 10 with R84bn under management! Campher noted that Allan Gray – with only eight funds – proved that success in the CIS industry wasn’t linked to a multitude of different product offerings. “You don’t have to launch a new fund every two weeks to try and make money,” he said, adding that the industry was working to address the proliferation of funds.
South Africa’s 10 largest management companies (Stanlib, Alan Gray, Absa, Investec, Prudential, Old Mutual, Sanlam, NedGroup Investments, RMB and Coronation) held 80.1% of total CIS assets under management. The rest (some 30 companies) share 19.9% of industry assets!
Campher observed: “In the institutional space we have quite a large percentage in bond funds. The big institutional managers often consolidate the pension funds they are managing into a single bond fund.” Institutional money is heavily invested in equity funds while money market unit trusts are preferred by retail investors who account for 72% of category assets.
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