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Outlook for equities positive

24 November 2004 Angelo Coppola

The outlook for equities remains positive and markets can be expected to advance further says Di Turpin executive vice chairperson of the Association of Collective Investments.

"With the rand still relatively strong, investors should use the opportunity to diversify portfolios offshore and diminish market risk. Globally the latest statistics show that in the second quarter some $75billion was invested in equity collective investments.

This was down on the previous three months' $143 billion, but all regions reported continued net inflows - $38 billion in the Americas, $24 billion in Europe and $14 billion in the Asian/Pacific,/Africa areas."

At the end of June 44 percent of world-wide unit trust assets were invested in equities ( the figure for South Africa is 31 percent) - 23 percent in money market funds and 20 percent in bonds. Balanced or mixed funds were 9 percent of total.

"The figures reflect a mixed pattern world-wide with geographical areas behaving often differently this time. It was a fairly quiet quarter with investors appearing to be confused about where and when to invest.

"Over the second quarter of 2004, stock market returns were also mixed across nations, with about half of the reporting countries experiencing negative stock price returns.

"Net cash flow to all funds worldwide decreased from $246 billion in the first quarter of 2004 to $18 billion in the second quarter, pulled down by the lower inflows in equity and balanced funds and outflows from bond and money market funds.

With interest rates rising in the US we have seen outflows from bond funds of $11 billion world-wide (2,9 percent) and a similar pattern in money market fund assets of $63 billion or 2 percent.

The number of unit trusts world-wide totals 54 126 with 41 percent equity funds, 22 percent bond funds, 21 percent balanced or mixed funds and 9 percent money market funds. Total world-wide collective investments assets were $14,41 trillion at the end of the second quarter.

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