The first quarter of 2013 saw a continuation of the sustained pickup in flows into unit trusts, with net inflows of R47 billion. This followed inflows of R41bn and R63bn into unit trusts in the final and third quarters of last year respectively. Investors
Despite the avalanche of bad news, equity markets have been seemingly unaffected and rising unabated, and this attracted substantially more flows into equity funds than in previous quarters.
As in previous quarters, multi-asset funds were once again popular, attracting inflows of R26.2 billion. Given that both low and high equity allocation funds were in demand, it appears that investors are selecting the appropriate asset mix based on their individual risk profiles.
Interestingly, global funds saw a fairly substantial drop-off in demand. This could indicate that investors believe that they have ‘missed the boat’ in terms of the opportunity to diversify offshore, given the sudden and steep decline in the exchange rate of the rand, particularly against the dollar.
Whilst a variety of factors, including potentially more labour unrest and a further widening of the current account deficit, would see the rand weaken even more into the short term, it is oversold on a longer-term basis. Any strength will probably see investors – painfully reminded that the currency can weaken – diversify offshore.
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