Unit trusts bonanza

More than R11-billion flowed into unit trusts in the March quarter, as investors remained bullish on prospects for equity markets, figures released by the Association of Collective Investments on Thursday show.

This was nearly double the December quarter’s inflow.

Di Turpin, the association’s CEO, said domestic equity funds and asset allocation funds were the most popular destinations.

“Domestic equity funds saw inflows of nearly R3-billion in the quarter. This is indicative of the bullish mood on local equity markets.”

The industry had a total of R42-billion inflow last year and Turpin believes it is on track to repeat the performance. There are now 551 funds in the unit trust market, excluding foreign funds.

Turpin said performance had been excellent in the 12 months ending in March, the average general equity fund showing more than 34% returns. Other sectors with high returns were growth funds (38,7%), value funds (42%), small companies funds (47,4%), industrial funds (41,6%) and financial funds (46,1%).

Turpin said that despite the equity markets not performing well after the crash in 2000, the industry had enjoyed steady growth.

She maintained, however, that basic investment wisdom did not change. “People always wait to see good news before they invest; the question is whether they are investing at the right time”.

The association found that 80% of collective investments were made in the domestic market

The industry has diversified steadily in the past five years. In 1999, equity funds accounted for 49% of funds; they now account for 29%.

Flexible funds have grown from 1% to 3%, while bonds have grown from 7% to 8%. The biggest growth has been in fixed-interest varied specialist funds, which include instruments such as derivatives. These have grown from 0,4% to 8%. Total industry assets under management stand at just less than R320-billion, excluding foreign funds.

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Lloyd Gedye
Lloyd Gedye
Lloyd Gedye is a freelance journalist and one of the founders of The Con.

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