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Collective Investments
Sunday, February 1, 2004
Record inflows 2003

In spite of volatile markets, South Africa’s unit trust industry showed strong growth in 2003 with net inflows doubling to a record R38,9 billion, says Association of Collective Investments CE Colin Woodin.

Assets increased by R50,5 billion to R230,3 billion and have trebled in the past five years. Announcing the industry year-end statistics, Mr Woodin says that unit trusts have become the investment vehicle of choice for South Africans.
“The industry has an important role to play not only in meeting the needs of sophisticated investors, but also making available the benefits of unit trusts to the new emerging market.”
Results for the year ended December show that the industry has produced excellent returns for investors, particularly for those who invested in domestic equities where the average fund return was 21% for General Equity against the FTSE/JSE All Share Index’s 16%.
Other top performing sectors in Domestic Equity were Growth funds averaging 27,8%, Value 29,7%, Small Cap 33,7%, Industrial 36,4%, Financial & Industrial 26,2% and Flexible Property 33,1%.
Inflows in the final quarter of 2003 remained strong rising R1,7 billion to R13,0 billion with the bulk of new investment being earmarked for domestic rather than foreign funds, the latter showing net outflows of R452m.
Most world wide funds and foreign funds saw outflows with the strong rand holding back performance: The MSCI index was up 33,8% in dollar terms, but only around 4% in rand terms over the year as against the All Share’s 16%.
Domestic flows again went largely to fixed interest (R8,2 billion), but this was below the previous quarter’s R9,2 billion indicating some switching into equities. The Money Market inflows still accounted for the major share (R5,1 billion), but were down from R7,7 billion in the previous quarter.
Domestic equity funds saw a resurgence of interest with net inflows of nearly R2 billion. The net flows into asset allocation funds (which include funds that meet the retirement fund regulations and where industry fund mangers decide on asset allocation) nearly doubled to R3,3 billion.
Among asset allocation funds, net inflows of R1,5 billion went into Targeted Absolute and Real Return funds with the remainder being invested into the Prudential Low (R558m) and Medium Equity (R495m) funds suggesting that many investors still remain risk averse. Flexible Property funds had a net R350m inflow.
The dominant domestic equity sector - General Equity - saw a continuation of the encouraging trend the previous quarter nearly trebling inflows to R1,4 billion. Other sectors showing strong inflows included Value, Varied Specialist and Small Cap Funds.
In the domestic fixed interest sector both income and varied specialist funds continued to be popular with inflows of R1,2 billion and R1,4 billion while R431 million was invested in bond funds.
The number of funds on offer to investors reduced from 482 to 466 with the number of management companies declining to 26 from a peak of 31 in 2000, reflecting industry mergers.

Copyright © Insurance Times and Investments® Vol:17.1 1st February, 2004
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