South Africa’s most-loved investment portfolio

Local multi-asset portfolios are the most popular investment portfolio amongst South African investors for the second year running.

This was revealed in the Collective Investment Schemes industry statistics for the quarter and year ended March 2023, released by the Association for Savings and Investment South Africa (ASISA).

These statistics showed that South African multi-asset portfolios remained firm favourites with investors for the second year, attracting net inflows of R59.2 billion to the end of March 2023.

The two most popular local multi-asset portfolios were high equity and income portfolios, attracting net inflows of R17.6 billion and R29 billion in the 12 months to the end of March 2023, respectively.

“For many years, SA multi-asset portfolios were the preferred investment vehicles for local unit trust investors and their financial advisers, but this started changing in 2016,” said ASISA senior policy advisor Sunette Mulder. 

“By the end of March 2021, the SA multi-asset category attracted net inflows of only R5 billion over the 12 months. SA interest-bearing portfolios were taking the bulk of the net inflows.”

Mulder said that, given the current market volatility and an uncertain outlook for the economy, the weak rand and other macroeconomic factors, the return to local multi-asset portfolios is not surprising. 

She added that multi-asset portfolios are designed to deliver a more stable performance than pure equity portfolios by smoothing out market volatility through diversification.

Multi-asset portfolios allow investors to achieve diversification across asset classes within one fund. Professional portfolio managers determine the appropriate exposure to the different asset classes in line with their investment mandates.

Mulder said that South African interest-bearing funds (short-term and variable-term) also attracted significant net inflows of R31.5 billion in the reported period.

She notes with interest that while global equity general portfolios, on average, outperformed most other categories over one, five and ten years, these portfolios recorded net outflows in the first quarter of this year and the third quarter of 2022. 

For the 12 months that ended March 2023, global equity general portfolios attracted net inflows of only R1.5 billion.

Going offshore 

Locally registered foreign portfolios held R737 billion in assets under management at the end of March 2023, compared to R694 billion at the end of December 2022 and R633 billion at the end of March 2022. 

These portfolios recorded net outflows of R4.7 billion for the quarter ended March 2022, bringing total net inflows for the year to R15 billion.

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 South African investors if they are registered with the Financial Sector Conduct Authority. 

Local investors wanting to invest in these portfolios must comply with the South African Reserve Bank’s regulations and will be using their foreign capital allowance.

There are currently 631 foreign currency-denominated portfolios on sale in South Africa.