Local CIS industry statistics reflect a tough second quarter for investors
The CIS industry statistics for the quarter and year ended June 2023, released by the Association for Savings and Investment South Africa (ASISA), show that participating CIS management companies attracted new investments worth R567.3 billion in the second quarter this year. At the same time, existing investors sold investments worth R577.7 billion, resulting in net outflows of R10.4 billion.
According to Sunette Mulder, senior policy advisor at ASISA, existing investors also chose to reinvest income declarations (dividends and interest) worth R26.4 billion. "While income declarations that are reinvested are not considered new money, investors who receive them are given the choice to buy additional units in their existing portfolios instead of withdrawing this money," explains Mulder.
The R26.4 billion reinvestments in the second quarter exceeded the net outflows of R10.4 billion, leaving the industry with an effective net inflow of R16 billion.
Mulder explains that unit trust portfolios are designed to give investors easy access to their money. She says as a result, when consumers are under pressure, and their emergency savings have been depleted, they are likely to turn to their unit trust investments for financial relief.
"During the second quarter, the repo rate increased by 0.5% to a 14-year high of 8.25%, which placed an additional burden on consumers servicing debt like home loans and car repayments. And in May this year, another petrol price increase meant that South Africans were paying on average R1.50 a litre more than in the previous year. Given the overall increase in living costs in South Africa, we were not surprised to see investors tapping into their investments."
At the end of June 2023, 19% of assets under management were held in SA Equity portfolios, while SA Interest Bearing portfolios held 30% of assets. Half of all assets (50%) remain in SA Multi Asset portfolios, with the rest in SA Real Estate portfolios (1%).
Mulder points out that SA Interest Bearing portfolios (Short Term and Variable Term) attracted significant net inflows of R34 billion for the 12 months to the end of June 2023. Money Market portfolios received R26.4 billion.
While Global Equity General portfolios, on average, outperformed most other categories over one, five and 10 years, these portfolios recorded net outflows in three out of four quarters to the end of June 2023. For the 12 months that ended June 2023, Global Equity General portfolios reported net outflows of R6.7 billion.
Mulder says investors who have taken a long-term view of 20 years or more on local equities will be pleased to know that the average performance delivered by the SA Equity General category over 20 years was 13.7%, followed by SA Multi Asset High Equity with 12.3%, and then Global Equity General with 11.3%.
She says this highlights the importance of thinking long-term when investing in CIS portfolios and constructing a well-diversified investment portfolio with the help of a qualified financial adviser.
There are currently 643 foreign currency-denominated portfolios on sale in South Africa.
Hedge Fund Statistics
The South African hedge fund industry ended the second quarter of 2023 with assets under management of R120 billion. This represents an increase in assets of R7 billion over the six months from the end of December 2022, when assets stood at R113.01 billion.
The number of hedge funds increased from 216 at the end of 2022 to 219 at the end of June 2023.
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