Half of all assets under management in local Collective Investment Schemes (CIS) are now invested in Multi Asset portfolios. These portfolios invest across the equity, bond, money and property markets with an expert asset manager deciding on the appropriate mix.
The Association for Savings and Investment South Africa (ASISA) recently released the local CIS statistics for the quarter and year ending September 2015, which show that South African Multi Asset portfolios hold 50% of assets, Equity portfolios 21%, Interest Bearing portfolios 25% and Real Estate 4%.
Commenting on the statistics, Sunette Mulder, senior policy adviser at ASISA, says SA Multi Asset portfolios have become the investment vehicle of choice for the majority of investors and their financial advisers since they provide diversification across asset classes within one portfolio.
SA Multi Asset portfolios attracted the bulk of the net inflows into CIS portfolios for the 12 months to the end of September 2015, contributing R64 billion of the total R120 billion. In the third quarter alone SA Multi Asset portfolios recorded net inflows of R21.6 billion against the total of R44.5 billion.
Mulder points out that SA Multi Asset portfolios have also consistently attracted the bulk portion of net inflows for the past six rolling 12-month periods to the end of September 2015.
Portfolios ranging from low equity to high equity exposure are available within the Multi Asset category. SA Multi Asset Low Equity portfolios recorded the highest overall net inflows of R17.7 billion for the 12 months to the end of September 2015. SA Multi Asset High Equity portfolios were not far behind with R16.8 billion. SA Multi Asset Income portfolios were the third most popular category attracting net inflows of R14.3 billion for the year ended September 2015.
Mulder notes that over the past four quarters investors either favoured SA Multi Asset Income portfolios and fled SA Multi Asset High Equity portfolios or the other way round, depending on what was happening in the markets.
In the third quarter of this year, SA Multi Asset Income portfolios once again trumped the other categories following the market downturn. These portfolios recorded the highest net inflows and High Equity portfolios the lowest net inflows of all the SA Multi Asset categories.
The JSE All Share Index reached an all time high of 55 188 points on April 26 this year. But in the third quarter this year the index shed 2.13% of its gains.
Mulder points out that investors are defeating their long-term objectives of achieving growth by trying to time the markets.
“It is time in the market that will deliver the desired outcomes, not timing the market. Volatility is best countered with an appropriately diversified portfolio, not by switching between asset classes. Since Multi Asset portfolios are already diversified across the asset classes it is even more important that the portfolio is given a chance to achieve its goals.”
She adds that the performance figures for the one-year, five years and 10 years show that SA Multi Asset portfolios consistently outperformed inflation.
At the end of the third quarter this year, the local CIS industry managed assets of R1.8 trillion and offered investors 1 274 portfolios.
Net inflows of R44.5 billion in the third quarter of this year – the highest for any quarter over the past two years – brought the total net inflows for the 12 months ended September 2015 to R120 billion.