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Collective Investments
Friday, August 1, 2008
June quarter

Collective investments net inflows rebounded in the June quarter reaching the R10 billion mark from R3,9 billion in the previous three months. Market assets dipped slightly to R656 billion from R659 billion.

Inflows were boosted by very strong flows into retail funds which ended the quarter with a R6,7 billion inflow as against R2,8 billion. Institutional inflows were also higher at R3,3 billion (R1,1 billion). Inflows to Domestic Asset Allocation funds were a feature with increased investments in Prudential Low, Variable Equity funds and Targeted Absolute and Real Return Funds. Sectors to show outflows included General Equity, Real Estate and Bond Funds.
Di Turpin chief executive of the Association of Collective Investments says the inflows were encouraging given the highly volatile markets in the wake of the sub-prime mortgage crisis and still soaring oil prices and interest rates. “They are still below the R15 billion inflow in June last year but well above the December quarter’s R8 billion. Flows have remained positive thus far through this difficult period for the markets suggesting investors recognise that collective investments are long term investments.
“Inflows into equities are down by R1,4 billion but this compares with a R6,6 billion outflow in March with money market again being a popular sector in view of the high returns reflecting current interest rates.
”Markets are likely to remain volatile for some time as the sub-prime crisis continues to unwind, consumers remain under pressure and offshore banks liquidity remains tight. The oil price will have an ongoing impact on global economies, markets and interest rates.
“Overall investors should maintain their monthly debit orders in line with their own financial plans and be well diversified across the market. On a three to five year many sectors historically look attractive. Some analysts are predicting a correction in commodities after their steep rise (there was an inflow into Resource Funds again this quarter) but non-commodity sectors such as financials are appealing on a long term view.”
Sectors which were popular this quarter included:
• Fixed Interest Varied Specialised Funds + R2,2 billion
• Asset Allocation
• Targeted Absolute and Return Funds +R1,4 billion
• Asset Allocation
• Prudential Variable Equity Funds +R1,3 billion
• Equity Varied Specialist Funds +R717m
• Allocation Prudential Low Equity Funds +R750m
• Equity Resources
• & Basic Industries Funds +R670m

The number of funds increased again the past quarter bringing the total to 855 (844).

Copyright © Insurance Times and Investments® Vol:21.7 1st August, 2008
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