Net inflows rise in money market funds
Money managed by local asset managers had surpassed the R2-trillion mark at the end of 2016, with money market funds attracting strong inflows over the year off the back of equity market volatility.
Higher net inflows into money market portfolios were not surprising, given volatile equity markets in 2016, said Sunette Mulder, senior policy adviser at the Association for Savings and Investment SA (Asisa). “A large chunk of 2016 net inflows went into corporate money market portfolios, however, which is not necessarily a true reflection of retail investor sentiment,” she said.
Figures from Asisa show that the collective investment schemes (CIS) industry attracted net inflows of R164bn in 2016 — a 64% increase on 2015.
This came primarily from individual investors, followed by institutional investors, such as retirement funds.
SA’s multi-asset portfolios attracted 42% of total net inflows (R71bn) over the year to December 2016, followed by interestbearing money market portfolios (R50bn).
Other interest-bearing portfolios attracted net inflows of R17bn, while equity portfolios lagged at R10bn in net inflows.
Coronation chief investment officer Karl Leinberger said that it was important for investors to maintain appropriate equity exposure. “Only growth assets will provide the long-term growth that investors need,” he said at a recent seminar.
“Equity markets [in SA] have been flat since 2014, this is what equity markets do. In 2000-11 the US market delivered a 0% return, but in the next five years it went up 80%. Resist the temptation to … cut equity exposure,” he said. About 42% of all international CIS assets are held in equity portfolios, as compared with 24% (including real estate), in SA, according to Asisa.
Investors in SA are more risk averse than their international counterparts, said Mulder.