The right balance

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.