The rather surprising decision by ABSA to close the biggest money market fund in the country had quite an impact on the latest data published by ASISA last week.
The local Collective Investment Schemes (CIS) industry reported net outflows of R18 billion for the second quarter of this year following the closure of South Africa’s biggest money market fund.
Releasing the CIS industry statistics for the quarter and year ended June 2021, Sunette Mulder, senior policy advisor at the Association for Savings and Investment South Africa (ASISA), explains that the second quarter CIS flow statistics provide a distorted picture due to the closure of the Absa Money Market Fund. Absa announced the closure of its R80 billion money market unit trust fund on 7 April 2021 and clients were given until 1 July 2021 to switch their money into alternative options.
Mulder says without the forced outflows from the Absa Money Market Fund, the industry would have posted healthy net inflows of R33 billion for the second quarter of this year.
“Absa provided its money market investors with the option of seamlessly transferring their investment into an Absa investment bank account that offers an interest rate equivalent or better than was offered by the Absa Money Market Fund. We assume that the majority of clients went with this option, which explains why the withdrawals reflect as net outflows in the CIS statistics.”
According to Mulder, the total annual net inflows to the end of June 2021 amounted to R98 billion, taking into account the closure of the Absa Money Market Fund. If the outflows from the Absa fund are disregarded, the annual net inflows would have been R149 billion.
Mulder reports that the CIS assets under management are fast approaching the R3 trillion threshold. As at 31 June 2021, the CIS industry managed assets of R2.9 trillion. This represents a growth in assets of close to R2 trillion in less than 10 years. The industry crossed the R1 trillion mark for the first time during the first quarter of 2012, with R1.02 trillion in assets under management as at 31 March 2012.
Mulder points out that as at the end of June 2021, only 18% of assets under management were held in South African Equity portfolios, while SA Interest Bearing portfolios held 32% of assets. Just under half of all assets (48%) were held in SA Multi Asset portfolios, with the rest in SA Real Estate portfolios (2%).
The media release contains some very informative data, including:
- Shift in SA CIS portfolio allocation over five years
- Investor trends and
- Offshore focus
