Collective Investments flows remain positive

Collective Investments flows remained positive in the March quarter in spite of volatile markets with net new investments of close to R4 billion.

Di Turpin (pictured right) chief executive of the Association of Collective Investments says it was a commendable performance by the South African industry as elsewhere, such as the UK there had been industry outflows.

“Over the past five years the South African collective investments industry has shown an average annual growth rate of 30.5 percent in assets (at a time when the country’s savings ratio is extremely low) underscoring its role in wealth creation. The number of funds is now 844 (831) reflecting the depth of funds on offer to local investors.”

An analysis of the latest quarterly statistics shows that retail fund flows accounted for R2,8 billion and institutional for R1 billion.

Turpin says as expected there were heavy outflows from equity funds with the Domestic Equity Funds sector down by R6,6 billion and asset allocation by R1 billion. But this was offset by very strong flows into fixed interest funds of R11,4 billion. Money market inflows were R9 billion during the quarter.

“It appears as if there was some switching out of equities into money market funds. There were negative flows in Financial Funds, Growth Funds and Smaller Companies Funds. But positive flows were recorded by Resources, Value and Large Cap funds.”

Turpin says the new Fundisa Education fund is off to a good start and the marketing infrastructure is now in place. The fund has been enthusiastically welcomed by both investors and educators.

Fundisa aims to encourage parents to save for their children’s education and is being backed by some R20m by the Department of Education and R14m from the collective investments industry.

Investors receive a 25% bonus on funds invested with certain maximums in addition to the return on their capital which is invested in low risk income funds.