Global equities crushed South African investments for 10 years

Global equities comfortably outperformed South African equities and multi-asset income funds over the last decade. However, the situation changed when looking at performance over 20 years.

This was revealed by the Association for Savings and Investment in South Africa (ASISA) in their update for the third quarter of 2023.  

The local asset management industry attracted net new investments of R9 billion in the third quarter of 2023 while existing investors reinvested income declarations (dividends and interest) worth R30 billion. 

The industry, therefore, had net quarterly inflows of R39 billion.

Despite the net inflows, the industry’s assets under management dropped marginally to R3.34 trillion from R3.36 trillion at the end of the second quarter of 2023.

Sunette Mulder, senior policy advisor at ASISA, said the decline in assets under management can be attributed to market volatility, with the JSE All Share Index dropping 3.5% in the third quarter.

However, over the past year, assets under management grew by 11% from R3.01 trillion to R3.34 trillion.

Fund performance over 20 years

The performance of different types of investment funds varies substantially over different periods. 

Global equity funds have dominated in returns over the past year, returning 23.4% compared to 12.2% for South African equity, 13.1% for South African multi-asset, and 8.4% for South African income funds. 

Exposure to global equity funds has served investors well over the past ten years, as South Africa’s economic growth has stagnated and the country has been plagued by load-shedding. 

Over the past ten years, even South African income funds have outperformed their equity counterparts, returning 6.9% versus 6.8%. 

However, over 20 years, South African equity funds have been the best-performing sector, according to ASISA. 

They returned 13.1% over the past 20 years versus 11.2% for global equity funds, 11.9% for South African multi-asset funds, and 7.6% for South African income funds.