CIS continues to attract steady inflows
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.