South Africa: When Money Under the Mattress Is Just Not Good Enough

analysis

It is difficult to stay invested in markets amid such uncertainty, but for investors willing to do so, passive balanced funds offer an inexpensive and conservative alternative.

Global uncertainty saw fund inflows decline more in the past year than usual as people chose to sit on their cash rather than invest it in global equity and debt markets.

Total worldwide assets in equity and debt markets fell in 2018 from $196.6-trillion to $187.1-trillion, according to research from Nedgroup Investments, which examined trends in index unit trusts, ETFs and other investment products.

When investors did choose to move money out of the safety of cash or money market unit trusts, they tended towards passive investments, which continue to grow at the expense of active investing across most markets.

As an aside, passive investing is now known as rules-based investing because the term passive investing is a misnomer -- even passive investment into funds that track an index requires an active decision.

Rules-based investing has grown significantly in the past decade -- led by US investment firms Vanguard and BlackRock -- but it's worth understanding its size in the context of worldwide capital markets. Roughly 75% of assets in worldwide capital markets...

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