First quarter figures on unit trust sales and net inflows suggest growing maturity among South African investors and indicate that a key lesson has been learned — selling high is a lot better than selling when the market hits the bottom.
The quarterly perspective comes from Kim Zietsman, head of single manager unit trusts at Stanlib, South Africa’s largest unit trust company.
She notes: “Traditionally, private investors in South Africa have tended to join a positive equity trend at a late stage when much of the upside has been realised; then hold on until the trend loses momentum before selling just as the market hits a trough. We’re delighted to see this behaviour being reversed, according to the latest figures from the Association of Collective Investments (ACI).
“Equities have had a tremendous run for the past three years and continue to do well, with the JSE hitting a succession of record highs. In fact, at the end of the quarter it was above the 20 000-mark and still looks like the place to be.
“Yet pure equity funds account only for 4% of net inflows over the last quarter, suggesting that profit-taking is the order of the day. In contrast, fixed-interest instruments account for 53% of net inflows, an indication that more conservative options are increasingly preferred as investors diversify their portfolios. Strategic planning like this is always better than emotionally driven tactical forays.”
The Stanlib house view is that investors should remain “over-weight” in equities and “under-weight” in bonds. However, says Zietsman, “judicious profit-taking is never a bad idea and after two or three years of strong equity performance the decision to pocket a portion of your gains is understandable. We see it as a sign of maturity. It’s very satisfying to see clients making gains and keeping them.”
The latest ACI figures show R99,96-billion in new sales and a net inflow of R17-billion in the three months to March 31. In the new sales category, the biggest winner was fixed-interest products, accounting for 71% of new money. Equity products and asset allocation funds each accounted for 12%, with just 3% going into listed property. – I-Net Bridge