From strong net inflows of R123.2 billion for 2019, to record breaking net inflows of R213 billion in 2020, the local Collective Investment Schemes (CIS) industry recorded its highest increase ever in the industry’s 55-year history. These record-breaking net inflows came amidst the volatility and uncertainty caused by the Covid-19 pandemic.
Statistics for the quarter and year ended December 2020, released by the Association for Savings and Investment South Africa (ASISA), show that the local CIS industry attracted R23 billion of net inflows in the first quarter of 2020, followed by a record breaking R88 billion in the second quarter, R57 billion in the third quarter, and finally a solid R44 billion in the fourth quarter of 2020.
Sunette Mulder, senior policy advisor at ASISA comments that while investors, both retail and institutional, were not shy to commit their money to local CIS portfolios in 2020, very few ventured outside of the perceived safety offered by interest bearing portfolios. She points out that South African investors are far more risk averse than their international counterparts. While 43% of all international CIS assets are invested in equity portfolios, in South Africa just under half of assets (46%) are held in South African (SA) Multi Asset portfolios, with the rest in SA Interest Bearing portfolios (35%), SA Equity portfolios (17%) and SA Real Estate portfolios (2%).
Worldwide, there were 125 434 CIS portfolios with total assets under management of $56.9 trillion as at the end of September 2020. (Figures provided by the International Investment Funds Association (IIFA), of which ASISA is a member, lag by one quarter due to the magnitude of statistics that have to be collated.)
At the end of December 2020, South African investors had a choice of 1 686 portfolios.
Investor trends in 2020
- The bulk of last year’s net inflows went into South African Interest-Bearing portfolios: – Money Market portfolios attracted R90.2 billion, Short Term portfolios gained R65.3 billion and Variable Term portfolios took R28.1 billion.
- The SA Multi Asset category, which was the most popular category with investors until 2016, managed to secure only R3 billion in net inflows last year.
- SA Equity portfolios suffered a second year of net outflows, recording R4 billion in net outflows for 2020.
- The average performance (net of fees) of SA Interest Bearing – Short Term portfolios topped the one-year and five-year performance charts to the end of December 2020.
- Money Market portfolios on average delivered the second highest returns over the 12 months to the end of December 2020 and placed third over five years.
- SA Multi Asset – Income portfolios on average delivered the second highest performance over five years to the end of December 2020.
Mulder points out, however, that investors who took a long-term view and braved the volatility in portfolios with high equity exposure would have been rewarded with performances (net of fees) that beat fixed interest over the 10 year and 20 year periods to the end of December 2020.
Where did the inflows come from?
- 26% of the inflows into the CIS industry in the 12 months to the end of December 2020 came directly from investors – down by 1% from 2019. This does not mean that these investors acted without advice. “A number of direct investors pay for advice and then implement the investment decisions themselves,” according to Mulder
- Intermediaries contributed 36% of new inflows in 2020, compared to 35% in 2019.
- Linked investment services providers (Lisps) generated 21% of sales, the same as in 2019.
- Institutional investors like pension and provident funds contributed 17%, as in 2019.
Click here to download the ASISA media release that also focusses on offshore statistics and include a sector performance comparison.
