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Collective Investments
Tuesday, May 1, 2007
Another record inflow

Collective Investments net inflows reached a record R27,6 billion in the first quarter of this year as both retail and institutional unit trust investment soared. This was well ahead of the previous all time peak of just under R20 billion reached in the third quarter last year and compares with a R17,4 billion inflow in the previous March quarter.

This means that at the close of the first quarter the industry had already achieved nearly half of the R58,2 billion total inflows for the whole of 2006. Total assets at the end of the March quarter stood at a record R596 billion (R458 billion in March 2006).
ACI chief executive Di Turpin says there was a sharp rise in both retail and institutional flows. Investors have been rewarded with outstanding performances over the past 12 months with the average domestic general equity fund showing a 32% return.
“There is little doubt that the ongoing strong performance of collective investments as well as the transparency of fees is receiving strong investor support.
“The industry has also gained from the problems surrounding certain other retirement products. Unit Trusts are recognised as the leading retirement offering due to the low costs, lack of penalties and excellent performance. The industry also has a key role to play in creating wealth, helping South Africans avoid the both poverty trap and fund the education of their children.”
While analysts will see the latest ACI figures supporting the current record market levels Turpin sounded a note of caution, that investors should diversify their portfolios across all asset classes.


“There is a currently a good deal of bullish news around: The economy overall is showing strong growth. Tito Mboweni’s decision at the recent monetary committee meeting not to increase interest rates for the time being has been favourably received. But investors should be aware that stock markets move in cycles. There could be rate increases down the line if credit extension currently running at about 27% remains too high.”
It was also interesting, she said, that more investors were preferring professional portfolio managers to conduct the allocation of their capital amongst the various asset classes instead of trying to do it themselves.
“In this quarter we saw R13,4 billion net inflows into asset allocation funds led by the Prudential Medium Equity’s R7,9 billion, Low Equity’s R3 billion and Flexible Funds’ R1,4 billion. Targeted Absolute and Return Funds had net inflows of R1 billion, slightly down on the R2,2 billion the previous quarter.“
The ACI figures show that of the total R27,6 billion net inflows R25,6 billion went into Domestic Funds, and just under R2 billion into Foreign Funds and World Wide Funds.
The number of funds rose from 750 in the December quarter to 765 at the end of March.
 

Copyright © Insurance Times and Investments® Vol:20.4 1st May, 2007
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