The South African fund industry enjoyed estimated net inflows of $10.0 bn over the course of the first nine months of 2019. These inflows occurred in a volatile but positive market environment driven by discussions about a trade war between the U.S. and China, a possible return of the euro crisis caused by developments in Italy and France, and a general economic slowdown with decreasing earnings at the company level. Nevertheless, since the equity markets showed a rebound over the course of 2019 so far, one would expect to see net inflows into mutual funds.
Assets Under Management in the South African Fund Industry
The assets under management in the South African fund industry increased from $168.9 bn (December 31, 2018) to $173.5 bn in 2019 year to date. This increase was driven by net sales, which contributed inflows of $10.0 bn, while the performance of the underlying markets contributed a negative $5.4 bn. It is noteworthy that the negative impact from market performance was driven by the conversion from the South African rand to the US dollar (the standard currency for this report), since the ZAR lost value compared to the US dollar.
Graph 1: Assets Under Management in the South African Fund Industry (U.S. Dollar Billions)
Source: Lipper from Refinitiv
Mixed-assets funds ($71.5 bn) were the asset type with the highest assets under management at the end of September 2019, followed by equity funds ($40.7 bn), bond funds ($25.3 bn), money market funds ($22.4 bn), alternatives funds ($13.0 bn), commodity funds ($0.5 bn), and real estate funds ($0.2 bn).
Graph 2: Market Share by Asset Type (September 30, 2019)
Source: Lipper from Refinitiv
South African Fund Flow Trends Year to Date 2019
Generally speaking, the year 2019 has so far been a tough year, with split results for some asset managers in the South African fund management industry. Nevertheless, the year can be considered as positive as mutual funds (+$10.0 bn) have enjoyed net inflows.
Graph 3: Estimated Net Sales Year to Date by Asset Type, September 30, 2019 (U.S. Dollar Billions)
Source: Lipper from Refinitiv
Fund Flows by Asset Type*
A more detailed view by asset type reveals that not all asset types enjoyed inflows so far in 2019. Bond funds (+$4.3 bn) was the best-selling asset type, followed by mixed-assets funds (+$2.0 bn), money market funds (+$2.0 bn), equity funds (+$1.7 bn), commodity funds (+$0.1 bn), and real estate funds (+$0.0002 bn). Conversely, alternatives funds (-$0.06 bn) was the only asset type with estimated outflows over the course of the first nine months of 2019.
Fund Flows by Sectors*
Bond ZAR (+$4.2 bn) was the best-selling sector overall, followed by Money Market ZAR (+$1.9 bn), Equity Global (+$1.9 bn), Mixed Asset ZAR Conservative (+$0.9 bn), and Mixed Asset ZAR Aggressive (+$0.9 bn).
Graph 4: The 10 Best- and Worst-Selling Sectors Year to Date, September 30, 2019 (U.S. Dollar Billions)
Source: Lipper from Refinitiv
At the other end of the spectrum, Equity Emerging Markets Global (-$0.2 bn) suffered the highest estimated net outflows overall, bettered by Mixed Asset USD Balanced Global (-$0.2 bn), Bond Global USD (-$0.1 bn), Absolute Return ZAR High (-$0.1 bn), and Mixed Asset USD Flexible Global (-$0.1 bn).
*Please note that Lipper launched an updated Lipper Global Classification Scheme in May 2019, which caused some shifts with regard to the assets under management and the estimated net flows within the single asset types and/or sectors. Please visit our website to learn more about the new Lipper Global Classifications.
Fund Flows by Promoters
Nedgroup Investments, with net sales of $3.4 bn, was the best-selling fund promoter for first nine months of 2019 overall, well ahead of Investec (+$1.1 bn), 10x (+$0.7 bn), Stanlib (+$0.6 bn), and Satrix Managers (Pty) (+$0.5 bn).
Graph 5: Ten Best-Selling Promoters Year to Date, September 30, 2019 (U.S. Dollar Billions)
Source: Lipper from Refinitiv
The views expressed are the views of the author, not necessarily those of Lipper or Refinitiv.
