Collective investments assets rise to record R621 billion

The Collective Investments industry's total assets breached the R600 billion mark for the first time in the June quarter as inflows remained strong.

Total assets ended the quarter at R621 billion with net inflows at R14,9 billion. ACI chief executive Di Turpin says the quarter is viewed as very satisfactory given the extremely high inflows in recent quarters.

"If one analyses the figures one sees that retail flows were down at R6,9 billion but, institutional inflows have remained high at R8 billion.
 
"Collective Investments with their low cost structure, transparency and performance are clearly continuing to be an attractive home for retirement and long term savings funds.

"Investors seemed to have adopted an even more cautious stance to new investment in equity funds during the quarter. There was a R2,6 billion net outflow from Domestic equity funds.

"In contrast some R7,3 billion flowed into Money Market funds in the June quarter. Although this was down on the R8,7 billion the previous three months it represents around 49 percent of all inflows with Money Market funds now representing 25 percent of total assets.

"While equities are no longer as cheap as last year, the market offers the prospect of cash beating returns. One would expect stock selection to increasingly be the main factor behind fund performance.

"Volatility may increase due to the interest rate outlook and global oil prices but,  those with three to five year time lines can invest to achieve their investment goals. Equities have historically offered the best long term returns."

Turpin says an encouraging feature is that more investors are opting for asset allocation funds where fund managers handle cash allocation to the various asset classes rather than attempting this themselves. Another R4,9 billion was invested in this area during the quarter.

"Funds with low equity exposure continue to be of primary interest which is of concern as these funds are designed for long term retirement planning."

Some of the funds in the Fixed Interest varied specialist category continue to attract investor attention, particularly the dividend income funds. This category attracted R1,8 billion of new money.

Fund of Funds were also popular with inflows of R5,3 billion as against inflows of R2,5 billion in the first quarter. Most domestic equity funds had outflows the General Funds sector where a majority of investors are invested had an outflow of  just below the R1bn mark while the Large Cap sector had the dominant outflow of R1,4 billion.

"This was driven by institutional investors (after the sustained equity bull run) reducing exposure to keep asset allocation in line with mandates. The sole  Domestic Equity sectors recording inflows were the Small Companies Funds and Value Funds each with around R300m.

"Worldwide and particularly foreign funds attracted 17 percent of flows this quarter as opposed to about 7 percent over the last few quarters."

The number of Collective Investments funds increased to 771 (765) during the quarter.

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