Where South Africans are investing their money

South Africans continue to pour money into multi-asset and interest-bearing investment funds as they continue to reduce their exposure to local equities. 

The Association for Savings and Investment South Africa (ASISA) revealed this in its quarterly update on the local collective investment schemes industry. 

The last quarter was characterised by immense volatility and uncertainty, driven by both global and local factors. Typically, this results in more defensive behaviour from investors. 

Globally, United States President Trump’s tariffs on goods imported into the world’s largest economy put financial markets into a tailspin.

Since the US administration began securing trade deals with major partners, it has paused tariffs and reduced those on China. Markets have bounced back to their pre-tariff levels. 

On a local level, the debacle surrounding the Budget and the increased tension among members of the ruling coalition have spooked markets and investors. 

This debacle translated into a sharp decline in the JSE All Share Index and the weakening of the rand, both of which recovered relatively quickly. 

Despite this, the local asset management industry ended the first quarter of 2025 with nearly R4 trillion under management and experienced the strongest net quarterly inflows in several years. 

This was supported somewhat by the JSE All Share Index (ALSI) achieving a 5.9% gain in the first quarter, primarily driven by strong commodity performance, resulting in a total return of 22.9% for the 12 months ended March 31, 2025. 

The JSE ALSI outperformed (in Rand terms) the S&P 500 both in the first quarter and the 12-month period, and the United Kingdom’s FTSE 100 over the 12-month period.

ASISA’s industry statistics for the quarter and year ended March 2025 show that participating asset management companies grew assets under management to R3.93 trillion. 

This represents a modest 1.4% increase from the R3.87 trillion under management at the end of December 2024 and a 10.0% increase over the 12 months from the R3.57 trillion under management at the end of March 2024.

Local CIS management companies recorded total net inflows of R104.14 billion over the 12 months to the end of March 2025, with the bulk of these inflows contributed by existing investors who reinvested income declarations from dividends and interest. 

ASISA’s Sunnette Mulder noted that while only R17 billion of the annual net inflows represented new money, it is noteworthy that R12 billion in new investments was received during the first three months of 2025.

Combined with reinvestments, total net inflows for the first quarter amounted to R48 billion – the highest since 2020.

Where South Africans are investing

Most assets under management are allocated towards multi-asset and interest-bearing portfolios, reflecting the desire for safety and stability amid uncertainty. 

This also reflects the very attractive yields offered by local government debt and other fixed-income instruments. 

At the end of March 2025, just under half of assets under management (49.5%) were invested in South African (SA) multi-asset portfolios. 

Local interest-bearing portfolios held 30.6% of assets, 18.6% of assets were in equity portfolios, and 1.3% were in real estate portfolios.

Mulder said local interest-bearing portfolios attracted the highest net inflows, both for the quarter at R29 billion and the year ended March 2025, with R52 billion going into these funds. 

Multi-asset portfolios came in with quarterly net inflows of R18 billion and annual net inflows of R45 billion. SA Equities recorded net inflows of R3 billion for the quarter but net outflows of R13 billion for the year.

Strangely, the declining appetite for local equities was not combined with increased offshore investment, which is partly attributed to many funds having to sell offshore investments to remain below regulatory limits. 

It may also reflect some asset managers bringing funds back into South Africa amid the optimism that followed the formation of the Government of National Unity (GNU). 

Locally registered foreign portfolios held assets under management of R974 billion at the end of March 2025, a slight drop from the R975 billion at the end of December 2024. 

These portfolios recorded net inflows of R5.08 billion for the quarter ended March 2025 and R8.86 billion for the year.

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 registered with the Financial Sector Conduct Authority (FSCA). 

Local investors wanting to invest in these portfolios must comply with Reserve Bank regulations and utilise their foreign capital allowance. There are currently 756 foreign currency-denominated portfolios on sale in South Africa.