Category Investments

Local is lekker

14 July 2004 Angelo Coppola

Figures released by the Association of Collective Investments underscore that investors have been continuing to buy unit trusts: Net inflows at R20.7bn in the first six months are running some 41% ahead of the same period last year.

Industry assets at the end of June rose to a record R249.6bn from R192bn a year ago.

“Although stock market growth was pedestrian in the June quarter with the FTSE/JSE All Share Index actually declining by 4,7%, average returns for the past 12 months have remained high and close to 30% for Domestic General Equity funds.

Smaller Companies funds led performance with 46,5%,” says ACI chief executive Colin Woodin. 

Although equities remain popular Woodin says some conservatism is noticeable with many investors preferring asset allocation funds where the asset mix is handled by the portfolio managers.

While markets have been reacting to worse than expected US economic indicators such as slower job creation and retail sales, the US economic recovery remains intact but at a slower pace than envisaged.

“We are likely to see a resumption in stock market growth and locally interest rates should remain low for some time, enhancing earnings prospects for the JSE.”

Reflecting the ongoing demand for Equity, Asset Allocation and  Prudential funds, inflows into Money Market funds fell to R2.7bn from the previous R5.5bn and make up 30% of industry total net inflows, down sharply on the average 53% seen last year.

After small outflows the previous quarter there was strong buying of Bond funds with inflows of  R812m. Varied specialist fixed income funds attracted R1,7bn (R459m) while inflows into Income funds totaled R373m (R734m).

With investors largely ignoring the benefits of the strong rand (domestic funds make up 93% of industry assets), foreign funds continued to see outflows. 

Overall there was a R495m net outflow, mainly out of direct equities. But Foreign Allocation funds had a R330m inflow suggesting investors here too are preferring to leave asset calls to the portfolio managers.

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