CIS industry rebounds as investors pump R64bn into local portfolios

The latest figures mark a turnaround from the decline recorded in the first quarter and suggest investors remained committed to long-term investment strategies despite ongoing market uncertainty.

Asisa chief of staff Sunette Mulder said the inflows demonstrated investor resilience in challenging conditions.

“Participating CIS management companies recorded total net inflows of R63.6-billion in the second quarter, of which R30.4-billion was attributable to new investments. Reinvested income declarations contributed R33.2-billion,” Mulder said.

Over the 12 months to the end of June, the industry recorded net inflows of R227-billion, including R92-billion in new investments and R135-billion from reinvested income.

At the end of June, investors had access to 1 945 locally registered CIS portfolios.

Multi-asset funds remain top choice

Multi-asset portfolios continued to dominate investor preferences, attracting R39 billion in net inflows during the second quarter and R138 billion over the 12 months to June.

The category accounted for more than half of the industry’s annual net inflows.

Within the segment, South African Multi Asset High Equity portfolios attracted R53.3-billion over the year, while South African Multi Asset Income portfolios received R51.7-billion.

Mulder said the trend reflected investors’ desire to balance growth opportunities with risk management through diversified portfolios.

“This shows that investors aimed for growth with maximum diversification by targeting a fairly balanced mix of equities and interest-bearing investments, predominantly within the SA Multi Asset category,” she said.

Equity funds return to favour

Another notable development during the quarter was a renewed appetite for equity investments.

General equity portfolios attracted R5-billion in net inflows during the second quarter, marking the first positive inflow into the category over the 12 months to June.

By the end of the quarter, multi-asset portfolios accounted for 51% of assets held in South African portfolios. Interest-bearing portfolios represented 29%, equity portfolios 19%, and real estate portfolios just 1%.

The figures suggest investors are becoming more comfortable increasing exposure to equities while maintaining diversification through broader multi-asset strategies.

Offshore portfolios face short-term setback

While local portfolios enjoyed strong support, offshore-focused investments experienced a weaker second quarter.

Locally registered foreign portfolios ended June with assets under management of
R1.2-trillion, an increase over the previous 12 months. However, the category recorded net outflows of R5.6-billion during the quarter, reversing the R2.74 billion in net inflows recorded in the first quarter.

Despite the quarterly decline, foreign portfolios still generated net inflows of R19.5-billion over the 12 months to June, indicating continued long-term interest in offshore diversification.

South African investors had a choice of 813 foreign currency-denominated portfolios at the end of the second quarter, offering exposure to major currencies including the US dollar, euro, pound and yen.

The latest statistics suggest that while investors are increasingly favouring local diversified investment options, offshore investments remain an important component of broader portfolio strategies.