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​​​​​​​​​​​​​​​​​​​Are Investors Becoming More Conservative?

12 November 2015

ASISA recently released the unit trust industry’s Q3 2015 statistics, revealing a few interesting investor trends. Carl Roothman, head of Retail at Sanlam Investments, highlights some of the trends observed.

Unit trusts remain a popular choice with investors. The industry experienced a staggering amount of net flows during Q3 (R51.1 billion), more than double that of Q1 and Q2 (R23.1 and R23.7 billion respectively). These numbers include flows into institutional unit trust funds, retail unit trust funds and funds of funds.

Where is the money going?

Excluding money market retail funds, it is noticeable that the SA Multi Asset Low Equity category has recorded the biggest net flows in Q3, coinciding with a relative slowing of the net flows into the SA Multi Asset High Equity category.

‘But one swallow does not make a summer,’ says Roothman. ‘We would need to wait for at least a few more quarters of ASISA statistics to see whether investors’ move towards funds with lower equity exposure and associated market volatility is indeed a “de-risking” trend.’

The preference for multi asset funds, in general, has been the trend for a few years now and Q3 2015 was no different. Combined, the SA Multi Asset High Equity, Medium Equity, Low Equity and Flexible categories attracted more than the rest of the categories combined.

The chart below shows the net retail fund flows into the main ASISA categories over time.

 

Which categories hold the most assets?

More than 30% of the unit trust industry’s retail fund assets are invested in the SA Multi Asset High Equity category. The majority of the funds in this category are regulation 28-compliant and popular among investors who invest towards retirement and want to enjoy the maximum equity exposure which is currently allowed by the Pension Funds Act.

Boutique managers taking a growing share of the pie

‘Another trend that we’re spotting,’ Roothman says, ‘is the increasing significance of boutique managers.’ In the two years to the end of Q3 2015 the assets managed by key boutique managers have grown by more than 50%, with these managers now managing a sizeable share of industry assets. (Our view is informed by a subset of the managers flagged as ‘third party managers’ within the ASISA quarterly statistics.)

The chart below illustrates how these third party managers (and within this grouping, the boutique managers) have slowly been increasing their share of the net flows, accelerating their % flows over the past year and a bit, in particular.

 

‘We are encouraged to see that, despite the perceived lowering of risk appetite we are witnessing in net flows, investors continue to save in this challenging economic environment,’ says Roothman.​

Disclosure

Although all reasonable steps have been taken to ensure the information in this document is accurate, Sanlam Investment Management (Pty) Ltd does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document. No member of Sanlam gives any representation, warranty or undertaking, nor accepts any responsibility or liability as to the accuracy of any of this information. This document is intended for information purposes only and the information in it does not constitute financial advice as contemplated in terms of the FAIS Act. Use or rely on this information at your own risk. Independent professional financial advice should always be sought before making an investment decision.

The content of this document remains the property of Sanlam Investment Management (Pty) Ltd and may not be reproduced without the written permission of Sanlam Investment Management (Pty) Ltd.

Sanlam Investment Management (Proprietary) Limited is a Licensed Financial Services Provider. Sanlam is a full member of ASISA. Please note that past performances are not necessarily an accurate determination of future performances, and that the value of investments / collective investment units / unit trusts may go down as well as up. Commission may be paid and, if so, would be included with the brokerage charges, securities transfer tax, auditor’s fees, bank charges, trustee fees and levies in the overall costs, which will be levied against the fund. A schedule of fees and charges and maximum commissions is available from the manager, Sanlam Collective Investments (RF) Pty Ltd. Collective investment schemes are generally medium- to long-term investments. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Collective investments are calculated on a net asset value basis, which is the total value of all assets in the portfolio including any income accrual and less any permissible deductions from the portfolio. Portfolio performance is calculated on a NAV to NAV basis and does not take any initial fees into account. An annualised growth rate is used for all performance data of 12 months or longer. Income is reinvested on the ex-dividend date. Total return performances are published. The source of performance data and risk statistics is Morningstar. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. Forward pricing is used.
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