ASISA stats – investors see lack of opportunities in current market

The first quarter collective investment scheme statistics released by ASISA today highlight the understandable level of confusion retail investors are now experiencing. The significant decline in net new retail flows from almost R25bn in the fourth quarter to R6.3bn* indicates reluctance on the part of individuals to commit their precious savings in a market where they perceive there to be a lack of opportunities. This is quite understandable, given the low returns on cash and the fact that investors are being told from every angle that domestic equities are expensive.

It therefore also comes as no surprise that there has been a net withdrawal in domestic equity funds, as investors take heed of this advice.

Interestingly, investors appear not to be following professional advice to diversify offshore, evidenced by a reduction in offshore flows. This suggests that investors continue to remain jaundiced to offshore investment, probably as a result of having been burnt over the last ten years due to dollar weakness and a poor performance from offshore assets. However, this will not always be the case and investors should take advantage of the current strong rand and recent exchange control relief to diversify their portfolios.

Further evidence that investors are uncertain in this environment is evidenced by investors’ preference for multi-asset funds, where an investment professional makes the asset allocation decisions on their behalf. While the professionals will not always get it right, a good portfolio manager, given their training, experience and access to information should get it right more often than the individual investor.