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Collective Investments
Friday, February 1, 2008
Growth limits

Collective Investments achieved net inflows totalling R8,4 billion in the December quarter. This was despite of the sub-prime mortgage crisis and volatile world equity markets.
Says Association of Collective Investments Chief Executive Di Turpin, “While inflows were lower than recent quarters, the industry experienced phenomenally high inflows over the past few years on the back of the economic boom.
“Lower inflows are in line with global collective investment activity where in the UK, for example, the industry experienced net outflows, probably due to concerns around the sub-prime mortgage issues.”
While it will take time for markets to digest the mortgage crisis, lower growth in the US and elsewhere and rising interest rates domestically, the local market will be supported by the high infrastructure spend and demand for raw resources.
“In spite of the negative influences analysts forecast investors should still see inflation beating returns on equity funds this year. Fund performance over the past 12 months has again been excellent.” She remarks.
“The Prudential Medium Equity sector is still in favour attracting R1,8 billion but the Prudential Low Equity funds were less popular this quarter, with net outflows.
“Fixed Interest Varied Specialist funds (R4,3 billion) and targeted absolute and real return funds (R1,4 billion) continue to attract a lot of investor attention. Foreign Asset Allocation flexible funds also made a welcome return to popularity amongst investors with a net inflow of R839 million. Local general equity funds however saw some profit taking with net outflows of R1,1 billion.
“Clients need to remember to stay invested and take a three to five year view - not attempting to time the market as long as their portfolios meet their goals. Most should be looking beyond this year toward improved prospects for 2009 and include equities in their diversified portfolios,” she adds.
“The number of funds increased to 831 (787 previously) during the quarter. Industry assets topped the R653,5 billion mark this quarter. Remember, they stood at only R180 billion five years ago reflecting the increasing popularity of Collective Investments.
ACI statistics show that popular sectors the past quarter (with net inflows) were:
• Domestic Fixed Interest Varied Specialist (R4.3 billion)
• Domestic Asset Allocation Prudential Medium Equity (R1,8 billion)
• Domestic Asset Allocation Targeted Absolute & Real Return (R1,4 billion)
• Foreign Asset Allocation Flexible (R839m)

Copyright © Insurance Times and Investments® Vol:21.1 1st February, 2008
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