Multi-asset unit trusts back in favour with SA investors

South African multi-asset portfolios found favour with investors in the 12 months to the end of the first quarter of this year, according to the Association for Savings and Investment South Africa (Asisa).

Asisa’s statistics show that domestic multi-asset portfolios attracted R55.4 billion, or 78%, of the R70.7bn in total net inflows for the local collective investment schemes industry for the year to the end of March.

This is the highest net inflow achieved by these portfolios since 2016/17, said Sunette Mulder, senior policy adviser at Asisa.

South African multi-asset high-equity portfolios were most popular with investors over this period, attracting almost R24bn in net inflows. In the 12 months to the end of March last year, these portfolios collectively had net outflows of R10.5bn.

“For several years, local unit trust investors and their financial advisers were investing almost exclusively in South African multi-asset portfolios. However, in recent years, the appetite for this sector waned, and South African interest-bearing portfolios attracted the bulk of the net inflows.”

South African equity portfolios were also back in favour with investors, attracting net inflows of R11.7bn, she said.

Mulder said it was obvious from the statistics that many investors moved their money into portfolios with a high equity exposure, expecting to participate in last year’s strong market growth. She said many of these investors invested back into equities just as market sentiment was turning.

She said a successful investment strategy requires a long-term commitment, together with an understanding that it is time in the market, as opposed to timing the market, that makes all the difference.

“Therefore, if investors moved into equities over the past year as part of a long-term plan structured with the help of a trusted financial adviser, the current volatility should not cause panic.”

On average, South African equity general portfolios and South African multi-asset high-equity portfolios tend to outperform interest-bearing portfolios over 10 years and more, she said.

In addition, most of the CIS portfolio categories delivered average returns that outpaced inflation over the five-, 10- and 20-year periods to March 2022.

Locally registered foreign portfolios held assets under management of R633bn at the end of March. These foreign portfolios recorded net inflows of R13.4bn for the quarter, bringing total net inflows for the year to R17.9bn.

CIS assets remain above R3 trillion

The local CIS industry reported net inflows of R28.1bn for the first three months of this year, bringing the total net inflows for the 12 months to the end of March to R70.7bn, according to Asisa.

Mulder said intermediaries contributed 33% of new inflows in the past 12 months, while 24% came directly from investors, although some of these investors acted after receiving financial advice.

Linked investment services providers generated 27% of sales, and institutional investors contributed 16%.

Mulder said the closure of South Africa’s biggest money market fund in June last year distorted CIS flow statistics not only for the second quarter of last year, but also for the 12 months to the end of March 2022. Without the outflows from the Absa Money Market Fund, the industry’s net inflows for the year would have exceeded R100bn.

According to Mulder, CIS assets under management remained above the R3 trillion threshold achieved in the fourth quarter of last year despite the turbulent start to the year for stock markets. Assets under management stood at R3.09 trillion at the end of March 2022, compared to R3.14 trillion at the end of December 2021.

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