SA unit trust industry suffers R20bn asset drop

JSE pressure
The quarterly AUM decline was attributable to market volatility as the JSE All Share Index slipped 3.5%.
Garth Theunissen - South African Collective Investment Schemes (CIS), commonly known as unit trusts, saw the combined value of their assets drop by R20 billion in the third quarter as financial market volatility offset net inflows.

Data from the Association for Savings and Investment South Africa (ASISA) - which represents the local unit trust industry - showed that CIS assets under management (AUM) fell slightly to R3.34 trillion in the three months to end-September 2023, from R3.36 trillion at the end of the second quarter.

This was despite the local unit trust industry attracting net inflows of R9 billion, which failed to counteract pressure on the local stock market.

Sunette Mulder, senior policy advisor at ASISA, said in a statement the JSE All Share Index (ALSI) slipped 3.5% in the third quarter, while there has been a 1.9% year-to-date decline.

Even so, Mulder says that when measured over the 12-month period to end-September 2023, the local CIS industry saw its AUM grow by 11% from R3.01 trillion at the end of the third quarter of 2022.



Asset allocation

In terms of asset allocation, ASISA data showed that roughly half the AUM in local unit trust portfolios was invested in South African multi-asset portfolios and 31% in domestic interest-bearing portfolios, which are allocated to products such as money market and bond portfolios.

South African equity portfolios held 18% of assets compared to only 1% for South African real estate portfolios. The number of unit trust portfolios available to local investors also increased to 1 824 as at end-September 2023, an increase of 19.

South African multi-asset portfolios attracted R60.5 billion in net inflows (including reinvestments) over the 12 months to end-September 2023, the second-highest year-on-year performance since 2016.

The most popular multi-asset categories were South African multi-asset income portfolios, with net inflows of R29.7 billion in the 12 months to the end of September 2023, and South African multi asset high equity portfolios, with net inflows of R20.4 billion.

South African interest-bearing portfolios attracted net inflows of R56.2 billion in the third quarter of 2023.



Global portfolios

Interestingly, global general equity portfolios saw average net outflows of R3 billion over the 12 months to the end of September 2023 despite outperforming South African multi-asset high equity and South African general equity portfolios when measured over one-year, five-year, and 10-year periods.

Nevertheless, when measured over 20 years, South African general equity portfolios outperformed with an average annual return of 13.1% over the two-decade period.

The AUM of locally registered foreign portfolios was R765 billion at end-September 2023, down from R810 billion at end-June 2023. These portfolios recorded net outflows of R7.12 billion for the quarter.

Net outflows for the year totalled R24.6 billion. – Fin24