Retail investors boost CIS inflows in September quarter

The sub-prime mortgage crisis which hit offshore equity markets failed to dampen investor enthusiasm for collective investments with total net inflows rising R3 billion to R18 billion in the September quarter.

Retail inflows were a particularly strong feature up R7,6 billion to R14,5 billion in spite of volatile offshore markets.

"It appears that the effects of the sub-prime fallout offshore have not had a major effect on South African investor behaviour, probably as they had been anticipating a market correction for a while and have been investing accordingly," says Di Turpin, Association of Collective Investments' chief executive.

"Some investors also clearly took the view that any setback to equity prices would be temporary and that it would be unwise to try and time the market.

"Ironically most investors probably would not have expected the shock, when it came to have started in the fixed interest sector. Fortunately the quality of local stock and the stringent investor protection rules in place in the Collective Investments structure all play their part in protecting the investor from risky asset management decisions.

"Growth prospects for the economy particularly with the large infrastructure spend are sound as is the long term outlook for equities. As an industry we are anticipating continued satisfactory inflows in part due to the continued investor migration from other retirement savings products to unit trusts which offer low costs, outstanding performance and transparency."

"The strong inflows this quarter were due to demand for retail funds while institutional flows were down. Fund choice, after a quarter where trends were slightly different, returned to normal patterns with 80 percent of inflows going to retail funds and local funds attracting the majority of money. This is in contrast to the previous quarter when institutional flows were heavy and there was far more interest in foreign Rand denominated funds.

"Fixed interest is still by far the most popular group, followed by the asset allocation fund sector. The main interest continues to be in the money market funds and the fixed interest Varied Specialist funds which between them took 62 percent of all flows this quarter.

"In the asset allocation funds, Targeted Absolute and Real Return funds once again raised their heads as more popular options with Prudential Low Equity and Medium Equity continuing to attract retirement flows."

"Apart from the value, growth and varied specialist funds, all the Domestic equity sectors had outflows during the quarter."
 
Total industry assets rose to R646 billion (R621 billion) during the quarter with the number of funds at 787 (771). 

Quarter Highlights (Net inflows)

* Retail  R14.5 billion (R6,9 billion)
* Institutional  R3,5 billion (R8,1 billion)
* Targeted Absolute and Real Return funds  R1,5 billion (R276 million)
* Varied Specialist Funds (Fixed interest)  R5,2 billion  (R1,8 billion)
* Money Market R5,9 billion (R7,3 billion)
* Prudential Low Equity R1,7 billion) (R2,1 billion)
* Prudential Medium Equity R1,8 billion (R2,2 billion)