Business Day (Johannesburg)
Edward West
29 October 2009
Johannesburg — LOCAL money-market unit trusts experienced a R5,8bn net outflow in the third quarter, the highest in five years, after investors began returning to the equity market.
Statistics from the Association for Savings and Investment South Africa (ASISA) for the local collective investment schemes (CIS) industry showed investors finally ready to trade the perceived safety of cash during the financial crisis for the potentially higher returns of equities as signs of global economic recovery took hold.
ASISA CEO Leon Campher said most individual investors missed much of the recent strong recovery in equities.
While institutional investors were moving back into equities in the second quarter, individual investors were still placing most of their money with money-market unit trust funds, said Campher.
Most individual investors did not participate in the 37,5% rise by the FTSE/JSE all share index (Alsi) from its lows in early March to end- September.
In rand terms, compared with the S&P 500 and the FTSE 100 indices, the Alsi was the best-performing index for the 12 months to September with a return of 4,51%, he said.
The local CIS industry attracted net flows of R99bn in the year to September, bringing total assets under management to R747bn. It was the second-highest annual net flow in any 12 month period; the highest was from end-June last year to this June, with R103bn.
Total sales for the quarter came to R158,6bn, against outflows of R143bn. This brought the net inflow for the third quarter to R15,6bn. By the end of September the industry offered 903 funds.
Asset allocation funds attracted the highest inflows in the third quarter at R10,2bn. The popularity of funds has risen over the years because they invest across the equities, bonds, money and property markets.
Fixed-interest funds (excluding money market unit trusts) attracted net inflows of R4,9bn.
Equity funds attracted net inflows of R3,6bn.
Domestic money-market unit trust funds suffered a fall from most popular fund class in the second quarter to least popular fund class in the third quarter.
Investec Asset Management director Jeremy Gardiner said equity markets had run hard, and several markets were looking exhausted from a pricing perspective. Because earnings should remain under pressure, a relapse in the short term was a possibility.
"Investors should tread carefully. Equity markets are not nearly as attractive as they were 60% ago, and earnings will remain under pressure, as the global economy is by no means fixed," Gardiner said.
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