South Africa’s unit trust industry saw total assets leap to R243-billion in the quarter to the end of March 2004, from R230-billion in the previous quarter, on the back of continuing strong inflows and impressive performances in many sectors for the 12-month period to the end of March, led by Domestic Industrial Equity Funds with a return of 63% on average.
Reporting on the results from the local unit trust industry for the first quarter of 2004 on Thursday, Association of Collective Investments (ACI) CEO Colin Woodin said the general equity category, which represents the bulk of investments, posted an impressive return of 45,56% for the 12 months to the end of March. The JSE all-share Index was 43,8% higher over the 12 months and gained 3,7% in the March quarter.
Woodin said the latest quarterly statistics showed that investors who took advantage of historically cheap markets after the market slump have been handsomely rewarded.
Other unit trust domestic equity sectors that performed particularly well over the past year included:
- Smaller companies, averaging 60,14%;
- Value funds, averaging 53,63%;
- Growth funds, averaging 51,61%; and
- Large caps, averaging 41,78%.
“Over the past 25 years the average performance per annum for the general equity sector was 19,5%,” observed Woodin. “This underscores that investors who invested for the long term, riding out volatility, have done phenomenally well.”
Net inflows topped the R9,8-billion mark, compared with R13-billion previously. Among domestic funds (representing 92% of total assets), R947-million flowed into equity funds continuing the strong demand, but down on the previous R2-billion.
About R757-million (R1,4-billion previously) went into general equity funds (60,7% of domestic equity assets) with R270-million (R325-million previously) into varied specialist equity funds and R333-million (R345-million previously) into value funds.
Small caps, a top performer, saw an outflow of R204-million against a R122-million inflow the previous quarter.
Asset allocation funds attracted net inflows of R3,3-billion, roughly in line with the previous quarter. Prudential low equity saw inflows of R813-million (versus R558-million the earlier quarter), while medium equity’s inflow was R698-million (R495-million).
Targeted absolute and real return funds continued to be popular with inflows of R1,292-billion (from R1,491-billion previously).
Flexible property inflows were R420-million (R350-million before).
Surprisingly, given the strong equity markets, fixed interest funds attracted large inflows of R6,4-billion (down from R8,2-billion), and once again the major flow of R5,5-billion (R5,1-billion) was into money market funds, which at R85-billion represent 35% of total industry assets.
Bond funds had outflows of R228-million, reversing the previous quarter’s inflow of R431-million. Income Funds attracted R734-million (R1,189-billion) with R459-million (R1,431-billion) going into varied specialist fixed interest funds.
Foreign fund inflows continued to disappoint given the strength of the rand. There was an R831-million outflow after a negative R452-million the previous quarter. About R932-million flowed out of equity funds and R64-million out of fixed interest, but asset allocation funds had R165-million inflows, suggesting investors are leaving investment decisions to portfolio managers.
Overall, Woodin says investors are missing out on an opportunity to diversify offshore while the rand is still strong.
“The best reason for investing offshore is diversification, which lowers risk,” he advised. “Investors should re-examine the wide range of registered foreign funds which are available.”
South African investors have 463 funds (versus 466 the previous quarter) in which to invest, while the ACI says nearly 2,2-million investors are using unit trusts. — I-Net Bridge