CIS con­tin­ues to at­tract steady in­flows

The Witness - - YOUR MONEY - — Busi­ness Editor.

THE lo­cal Col­lec­tive In­vest­ment Schemes (CIS) in­dus­try con­tin­ues to at­tract steady quar­terly in­flows as lo­cal in­vestors seem un­de­terred by the tur­bu­lent po­lit­i­cal and economic en­vi­ron­ment.

Sav­ings and In­vest­ment South Africa (Asisa) sta­tis­tics show the lo­cal CIS in­dus­try recorded net in­flows of R38 bil­lion in the third quar­ter.

This brings to R138 bil­lion the to­tal net in­flows for the year ended Septem­ber 30, 2017.

Asisa se­nior pol­icy ad­viser Sunette Mul­der said CIS port­fo­lios ended the third quar­ter with as­sets un­der man­age­ment of R2,19 tril­lion.

As­sets un­der man­age­ment grew by more than R100 bil­lion from the sec­ond quar­ter.

SA Multi As­set port­fo­lios held 50% of these as­sets, SA In­ter­est bear­ing port­fo­lios 26%, SA Eq­uity port­fo­lios 20% and SA Real Es­tate port­fo­lios four per­cent.

The in­dus­try’s as­set com­po­si­tion over the past five years paints an in­ter­est­ing pic­ture, said Mul­der.

At the end of Septem­ber 2012, SA Multi As­set port­fo­lios held only 33% of as­sets, while in­ter­est bear­ing port­ fo­lios held 41%, eq­uity port­fo­lios 22%, and Real Es­tate four per­cent.

While net in­flows have re­mained con­sis­tently strong, with SA Multi As­set be­ing the cat­e­gory of choice, “there has been a dis­tinc­tive shift to­wards in­ter­est bear­ing port­fo­lios this year,” said Mul­der.

With SA In­ter­est Bear­ing Short Term and Money Mar­ket port­fo­lios top­ping the per­for­mance leader­board for the 12 months to the end of Septem­ber 2017, it is not sur­pris­ing that in­vestors chan­neled the bulk of their in­vest­ments into these port­fo­lios.

SA In­ter­est Bear­ing port­fo­lios at­tracted an­nual net in­flows of R68 bil­lion, of which R33 bil­lion went into SA Money Mar­ket port­fo­lios, and R35 bil­lion into SA In­ter­est Bear­ing Short Term and Vari­able Term port­fo­lios.

SA Multi As­set port­fo­lios at­tracted R46 bil­lion in an­nual in­flows and SA Eq­uity port­fo­lios R10 bil­lion.

Mul­der said that chas­ing re­turns, or mar­ket tim­ing, is a gam­ble that rarely pays off.

“Col­lec­tive in­vest­ment scheme port­fo­lios are long­term in­vest­ment ve­hi­cles and a suc­cess­ful in­vest­ment strat­egy re­quires con­sis­tent time in the mar­ket.

“With the help of a trusted ad­viser, in­vestors should pick port­fo­lios for five years or longer that match their risk pro­file and pro­vide the re­quired di­ver­si­fi­ca­tion,” she said.

She said while SA In­ter­est Bear­ing Short Term and SA In­ter­est Bear­ing Money Mar­ket port­fo­lios had out­per­formed over the one year, SA Multi As­set High Eq­uity port­fo­lios and SA Gen­eral Eq­uity port­fo­lios con­sis­tently out­per­formed in­ter­est bear­ing port­fo­lios over the five­, 10­ and 20­year pe­ri­ods to the end of Septem­ber 2017.

In­flows into the CIS in­dus­try (29%) in the 12 months to the end of Septem­ber came di­rectly from in­vestors.

In­ter­me­di­aries contributed 26% of new in­flows. Linked in­vest­ment ser­vice providers (Lisps) gen­er­ated 20% of sales and in­sti­tu­tional in­vestors like pen­sion and prov­i­dent funds contributed 25%.

Lo­cally reg­is­tered for­eign port­fo­lios held as­sets un­der man­age­ment of R434 bil­lion at the end of Septem­ber 2017, an in­crease from the R403 bil­lion at the end of June 2017.

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