The right bal­ance

Financial Mail - - FOX - Stephen Cranston cranstons@fm.co.za

The SA unit trust in­dus­try will soon reach the R2 tril­lion in as­sets mark.

At the end of June, the in­dus­try had reached R1.96 tril­lion.

Ac­cord­ing to the As­so­ci­a­tion for Sav­ings & In­vest­ment SA (Asisa), SA in­vestors have added a net R131bn in as­sets to the in­dus­try in the past 12 months. About 55% of this went into SA multi-as­set or bal­anced funds.

In con­trast, gen­eral eq­uity funds had net with­drawals of R5.1bn. There were also R600m of with­drawals from in­dus­trial funds and R400m from small­cap funds.

In the June quar­ter, 43 funds were added — more than the en­tire in­dus­try in 1991 — and there are now no less than 1,403 funds from which to choose.

Asisa CEO Leon Cam­pher says high eq­uity, multi-as­set funds have de­liv­ered very sim­i­lar per­for­mance to gen­eral eq­uity funds over five, 10 and 20 years, but at lower risk. Over one year, high eq­uity bal­anced funds have de­liv­ered a 5.1% re­turn, com­pared with just 1.8% for gen­eral eq­uity.

High eq­uity funds now ac­count for 24% of unit trust as­sets, com­pared with 21% for eq­uity funds and 16% for money mar­ket funds.

How­ever, over the past year money mar­ket funds have re­bounded from their low point af­ter the African Bank col­lapse two years ago, when con­fi­dence in the funds dried up. Nearly R34bn has flowed back into the sec­tor.

Bal­anced funds pro­vide a sin­gle en­try point into equities, bonds, cash and prop­erty.

They pro­vide di­verse re­turns that cush­ion the blow when the JSE tanks.

Asisa se­nior pol­icy ad­viser Sunette Mul­der says that 32% of to­tal flows into unit trusts came di­rect from the pub­lic, though some in­vestors had con­sulted fi­nan­cial ad­vis­ers first. In­ter­me­di­aries brought in 21% of sales, 23% came when clients bought prod­ucts from in­vest­ment plat­forms and a fur­ther 24% came from in­sti­tu­tional in­vestors such as pen­sion and prov­i­dent funds.

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