SA multi asset portfolios consistently attract bulk of net inflows

28 July 2015 Leon Campher, ASISA
Leon Campher, CEO, ASISA.

Leon Campher, CEO, ASISA.

Total net inflows for the local Collective Investment Schemes (CIS) industry amounted to R77 billion for the 12 months to the end of June 2015, almost half the net inflows achieved for the same period to the end of June 2014.

Releasing the local CIS statistics for the quarter and year ending June 2015, Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA), says the lower annual net inflows do not come as a surprise considering that this reporting period includes the impact of the African Bank woes.

“This 12 month reporting period effectively kicked off with the African Bank debacle, which resulted in net inflows of only R2 billion for the third quarter last year. However, once investor nerves had settled, net inflows went up to R38 billion in the fourth quarter last year, declining to R16 billion in the first quarter of this year and moving back up to R21 billion in the second quarter of 2015.”

South African Multi Asset portfolios continued to attract the bulk of the net inflows for the 12 months to the end of June 2015, contributing R74 billion of the total R77 billion in net inflows. SA Interest Bearing portfolios and SA Money Market portfolios on the other hand recorded outflows of R15 billion and R37 billion respectively for the 12 months to the end of June 2015.

He also notes with interest the healthy net inflows of R28 billion into SA Equity portfolios over the 12 months to 30 June 2015 – the highest for any rolling 12-month period to the end of June.

“We hope that investors’ sudden interest in general equity portfolios is backed by a long-term view and not simply a case of investors trying to time the market,” says Campher. “It is time in the market that will deliver the desired outcomes, not timing the market,” he adds.

“While there have been no fixed flow patterns for equity, interest bearing and money market portfolios in recent years, local multi asset portfolios have maintained their position as firm favourite with investors for the past six years,” says Campher.

Campher points out that SA Multi Asset portfolios have been consistently attracting the bulk portion of net inflows for the past six rolling 12-month periods to the end of June 2015.

Multi Asset portfolios invest across the equity, bond, money and property markets, with the asset manager deciding how much money to invest in each asset class. These portfolios have become popular with investors and advisers alike since they provide diversification across asset classes within one portfolio, with an expert asset manager deciding on the appropriate mix. Portfolios ranging from low equity to high equity exposure are available within the Multi Asset category.

The industry in summary

At the end of the second quarter this year, the local CIS industry managed assets of R1.8 trillion and offered investors 1 225 portfolios.

Net inflows of R21 billion in the second quarter of this year brought the total net inflows for the 12 months ended June 2015 to R77 billion.

SA Multi Asset portfolios hold 49% of assets, Equity portfolios 22%, Interest Bearing portfolios 25% and Real Estate 4%.

Who invested?

Campher says 33% of the inflows into the CIS industry in the 12 months to the end of June 2015 came directly from investors. He notes, however, that this does not mean that these investors acted without advice since a number of direct investors pay for advice and then directly implement the choice of portfolio.

Intermediaries contributed 21% of new inflows, while linked investment services providers (Lisps) generated 24% of sales and 22% of sales was received from institutional investors like pension and provident funds.

Offshore focus

Locally registered foreign portfolios held assets under management of R313.7 billion at the end of June 2015, compared to R283.2 billion at the end of March 2015.

These foreign portfolios recorded net inflows of R15.6 billion for the second quarter of this year.

Foreign currency unit trust portfolios are denominated in currencies such as the dollar, pound, euro and yen and are offered by foreign unit trust companies. These portfolios can only be actively marketed to South African investors if they are registered with the Financial Services Board. Local investors wanting to invest in these portfolios must comply with Reserve Bank regulations and will be using their foreign capital allowance.

There are currently 363 foreign currency denominated portfolios on sale in South Africa.

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