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Collective Investments
Saturday, November 1, 2008
Collecting associations

Heavy inflows into money market funds once again boosted total Collective Investment net inflows which rose to just over R10 billion to R19,9 billion in the September quarter. Total industry assets fell by R9 billion to R647 billion reflecting market conditions. This is according to the Association for Savings and Investment South Africa (ASISA) – also see footnote..
It was another encouraging quarter for the collective investments industry during the global credit crisis - whilst inflows into equity funds were limited given the turmoil in global equity markets there was no major investor selling.
Thus far, the domestic industry has maintained its record of having positive flows every quarter since the crisis began - unlike the pattern overseas where funds have seen heavy outflows.  Net inflows for the past 12 months ended September 2008 at R42 billion.
”Local investors seem to have wisely decided to sit tight and wait for markets to calm again rather than make rash portfolio decisions amidst these volatile trading conditions,” says industry spokesperson Di Turpin.
“These markets have also of course underscored the benefits of having widely diversified portfolios spread across all asset classes. Investors will have to wait patiently for stability to return to markets. We have seen massive intervention by Central Banks across the globe using a broad range of measures and these will take time to work.”
South African investors have been less affected by the equity slump than their counterparts elsewhere as the equity content of their portfolios is far lower than those in the US and Europe. They have favoured managed or low risk prudential funds with low equity content.
Industry figures show that September quarter inflows were well spread among institutional and retail funds – institutional net inflows were up from R3,3 billion to R6,8 billion while retail rose from R6,7 billion to R13 billion.
Domestic Equity general funds had outflows of just under R900 million – but this was well down on the past two quarters. There were inflows to Large Cap, Growth funds and surprisingly Financials funds. Among the asset allocation sector Targeted Absolute and Real Return funds attracted R927 million and Prudential Variable Equity R375 million. The Real Estate sector had inflows of R737 million.
In the fixed interest sector,  the Varied Specialist funds had inflows of R5,8 billion and money market  net inflows were R15 billion.
Footnote: ASISA represents the majority of South Africa’s asset managers, collective investment scheme management companies, linked investment service providers, multi-managers, and life insurance companies. It was formed recently by members of the Association of Collective Investments (ACI), the Investment Management Association of South Africa (IMASA), the Linked Investment Service Providers Association (LISPA) and the Life Offices’ Association (LOA).

Copyright © Insurance Times and Investments® Vol:21.10 1st November, 2008
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