SA Collective Investment Schemes (CIS), commonly known as unit trusts, ended 2022 with R3.14-trillion in assets under management (AUM).
That was despite the sector having to navigate a range of challenges ranging from load-shedding to accelerating inflation and heightened risk aversion due to the impact of the Ukraine conflict. The latest quarterly statistics from the Association for Savings and Investment SA (Asisa) , which represents the local asset management and life insurance industries, show that the unit trust industry also saw net inflows of R108bn in 2022.
“Returning assets under management to above the R3-trillion mark was quite an achievement given the strong headwinds that our industry faced in the past year,” said Sunette Mulder, senior policy adviser at Asisa.
The industry’s AUM fluctuated largely in lockstep with movements in the JSE All Share Index, which ended 2022 almost exactly where it finished in December 2021. The local bourse closed at 73,048 index points on December 30, 2022 compared with 73,709 on December 30, 2021.
SA’s CIS industry first passed the R3-trillion milestone in the fourth quarter of 2021, when it finished the year with R3.14-trillion in AUM. However, financial markets were rocked by turbulence in early 2022 when Russia invaded Ukraine, sparking off a sharp rise in energy prices and worsening supply chain disruptions that began with the onset of Covid-19 lockdowns.
That resulted in local CIS assets gradually declining during the course of 2022, dropping to R2.98-trillion in the second quarter before clawing back lost ground to end the year at more or less the same levels as the previous year.
Just less than half of local CIS assets (49%) are in SA multi-asset portfolios, with the rest in SA Interest Bearing portfolios (31%) and SA Real Estate portfolios (1%). Mulder said 44% of all international CIS assets are invested in equity portfolios.
The Asisa statistics show that of the R108bn in total net inflows for the year to end-December 2022 about R59bn went to SA multi-asset portfolios, the highest proportion achieved by this fund class since 2016/17. SA multi-asset funds comprise 769 portfolios across six categories — income, flexible, high equity, medium equity, low equity and unclassified — and are designed to provide investors with access to a diverse array of asset classes within a single portfolio.
The highest net outflows in 2022 were recorded by local short-term interest-bearing funds, which lost a net R8bn. Mulder notes that investors took an interesting approach to the rollercoaster investment environment in 2022, which was characterised by increasing interest rates together with pockets of opportunity in the equity market. Investors opted in almost equal parts for both SA multi-asset income portfolios (R24.5bn) and SA multi-asset high equity portfolios (R21bn).
Also popular with investors were portfolios in the SA interest-bearing variable term category, which attracted net inflows of R24.1bn in 2022.
“Not surprisingly, given last year’s extreme market volatility, the SA Equity categories focused on niche sectors (Industrial, Large Cap and Mid & Small Cap) also suffered net outflows in 2022, as did the SA Real Estate General sector,” said Mulder.
The 624 locally registered foreign currency denominated portfolios in SA had R694bn in assets at end-December 2022, down slightly from the R698bn at the end of 2021.
Foreign currency unit trust portfolios are denominated in currencies such as the dollar, pound, euro and yen and are offered by foreign unit trust companies. These portfolios can only be actively marketed to SA investors if registered with the Financial Sector Conduct Authority (FSCA) and are only open to local investors who invest using their foreign capital allowance as per SA Reserve Bank regulations.
The SA hedge fund industry also grew its assets by an unprecedented 30% in 2022, ending 2022 with R113.01bn in AUM. That’s up from R86.93bn at the end of 2021. Asisa’s statistics also show that the industry attracted net inflows of R5.33bn in 2022.
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