Tough first quarter for unit trusts, ETFs

THE LOCAL collective investment schemes industry reported a 3.2% drop in assets under management for the first quarter of this year as a result of difficult market conditions and subdued net inflows on the back of bruised investor sentiment.

According to industry statistics for the quarter and year ended March 2018, released this week by the Association for Savings and Investment South Africa ( Asisa), assets under management in unit trust funds and exchange traded funds dropped to R2.18 trillion over the first quarter of this year from R2.25 trillion at the end of December 2017.

Sunette Mulder, senior policy adviser at Asisa, says not only did the JSE All Share Index report a drop of 6% in the first quarter, contributing to lower assets under management, but the industry attracted quarterly net inflows of only R3 billion for the quarter.

“The collective investments industry last reported net inflows in the single digits in the third quarter of 2014 when net inflows came in at only R2 billion.

“This was the same quarter that marked the start of the African Bank saga, which unnerved investors.

“It is probably no coincidence that investors were spooked in the first quarter of this year as the Steinhoff debacle continued to unfold.”

Mulder says despite the anaemic net inflows for the first quarter of this year, the industry attracted healthy net inflows of R107bn for the 12 months to the end of March 2018.

She says that year-on-year the local CIS industry has also delivered a steady growth in assets. At the end of March assets stood at R2.18 trillion, compared to R2.07 trillion at the end of the first quarter of 2017.

In the quarter to the end of March, net outflows from South African Interest Bearing Variable Term portfolios were R4.4bn and those from money market portfolios were R9bn.

SA Multi Asset High Equity portfolios, on the other hand, attracted strong net inflows of R9.7bn.

SA General Equity portfolios were also popular with investors, attracting the second highest net inflows for the quarter of R4.4bn.

Mulder says these patterns indicate that resilient investors in all likelihood used the market turmoil as a buying opportunity.

At the end of March, investors had a choice of 1 584 funds, an increase of 62 from 2017. – Staff Reporter