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Collective Investments
Thursday, June 1, 2006
Record net inflows

Heavy inflows are continuing into the collective investment industry with the March quarter’s R16,7 billion (up 43% on the previous three months of R11,7 billion. This was the best quarter ever achieved by the unit trust industry.

Industry assets under management leapt to just under the R459 billion mark (R415 billion) reflecting good market performance and heavy inflows. Association of Collective Investments chief executive Di Turpin says the industry is growing rapidly.
“If one considers that total assets only stood at R243,5 billion in March 2004 it gives some indication of the huge demand for collective investments. Looking at the figures themselves we did, as expected, have some profit taking by investors this quarter. Domestic equity funds had outflows of R1 billion. The market was up 13% over these three months and 57% from a year ago. This seems to indicate that investors are learning to sell when markets are high.
“We are also continuing to see caution when clients are advised, which is reflected in the higher net flows into asset allocation and other low risk funds.
“Average fund performance in line with the market was excellent with a sector such as General Equity returning 53%, Value 57% and Resources 59%. The average returns on the Prudential Low Equity funds over one year was 22% and medium equity 36%.”
Retail net inflows rose from R9,6 billion to R13,0 billion and institutional from R2,1 billion to R6,6 billion. A feature of the retail inflows was the strong performance of the so-called 3rd party funds with inflows of more than R5 billion (R1,1 billion).
Two of the main drivers in the quarterly figures were the strong net inflows into Domestic Asset Allocation funds (up from R6,6 billion to R9,4 billion) and Fixed Interest which rose by more than R5 billion.
In asset allocation the Prudential low equity and medium equity funds had inflows of R2,8 billion (R1,3 billion) and R1,3 billion (R1,2 billion) respectively. Targeted and absolute return funds remained popular with inflows of R3,2 billion (R2,3 billion) and Flexible Fund inflows were also higher at R2,2 billion (R1,8 billion).
Money market inflows rose to R5 billion after an outflow R1,1 billion the previous quarter. Varied specialists funds category inflows were up from R4,7 billion to R5 billion. Bond funds saw inflows rise from R506 million to R772 million.
There were mainly small outflows from domestic equity funds, the exception being the Real Estate Sector with a R1 billion inflow (R150m) and the Value Fund sector with a R397 million (R28 million) inflow. General equity funds - where the bulk of investor funds are housed had a small inflow of R87m after R937 million the previous quarter.

Copyright © Insurance Times and Investments® Vol:19.3 1st June, 2006
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