Where South African asset managers are investing your money

South African asset managers have shifted their investment approach over the past five years, increasing their exposure to global equities and cutting back on local equities. 

This was revealed in the 2023 Alexforbes Manager Watch Annual Survey, where the country’s largest asset managers were listed and investment trends outlined. 

The Alexforbes survey of retirement fund investment managers showcases the performance of institutional fund managers in South Africa.

It ranks the largest and best asset managers and gives other information, including their respective BBBEE ratings.

The Alexforbes Manager Watch has tracked the retirement fund investment management industry since the dawn of democracy in South Africa.

The survey provides a key reference point to all South African retirement funding industry stakeholders.

In its research, Alexforbes compiled the average asset allocation for Global and South African balanced investment funds. 

This was done to provide an example of how asset managers have shifted their investment allocations in recent years, with Alexforbes tracking this data since 2018. 

It must be noted that Alexforbes’ research focuses only on assets managed on behalf of South African clients by South African asset managers. 

For example, Ninety One’s extensive fund offering for its international clients is not included in this research. 

Alexforbes’ research and survey on Global and South African balanced funds revealed that local asset managers have shifted their allocation significantly in the past five years. 

For global balanced funds, asset managers have increased their allocation to global equities from 24.56% in 2018 to 34.20% at the end of 2023. 

This has resulted in a corresponding decrease in allocation to South African equities, which has declined from 45.65% of portfolios to 38.66% in the same period. Investment in South African listed property has also seen a decline. 

Interestingly, due to high interest rates in South Africa and thus, higher government bond yields, asset managers have increased their allocation to this asset class. 

The shifts in asset allocations can be seen in the graphic below. 

South African balanced funds have not changed their asset allocation nearly as much. This is partly due to them being unable to invest clients’ savings outside of the country. 

However, a similar trend can be seen in South African listed properties, which have declined from 6.41% of portfolios to only 2.83% at the end of 2023. 

Local government bonds have seen an increase, making up over a quarter of allocated investments from these funds. 

Exposure to local equities has remained relatively stable at above 60%, with a peak of 66.13% being allocated to this asset class in 2021. 

These changes can be seen in the graphic below.