March 31, 2020

South African Fund Market Summary – 2019

by Detlef Glow.

The South African fund industry enjoyed estimated net inflows of $9 bn over the course of 2019. These inflows were way above the flows for 2018 ($3 bn) and occurred in a positive market environment with an increased volatility driven by discussions about a possible 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 very strong rebound over the course of 2019, one would expect to see net inflows into mutual funds.

Assets Under Management in the South African Fund Industry

Assets under management in the South African fund industry increased from $168.9 bn (December 31, 2018) to $190.8 bn in 2019. This increase was driven by the performance of the underlying markets, which contributed $21.9 bn, while net sales contributed inflows of $9 bn. It is noteworthy that the impact of the market performance is also driven by the conversion from the South African rand to the U.S. dollar (the standard currency for this report), since the ZAR lost value compared to the U.S. dollar.

Graph 1: Assets Under Management in the South African Fund Industry (U.S. Dollar Billions)

Source: Refinitiv Lipper

Mixed-assets funds ($90.4 bn) were the asset type with the highest assets under management at the end of December 2019, followed by equity funds ($44.3 bn), bond funds ($28.6 bn), money market funds ($23.3 bn), alternatives funds ($3.5 bn), commodity funds ($0.6 bn), and real estate funds ($0.2 bn).

Graph 2: Market Share by Asset Type (December 31, 2019)

Fund Market Review South Africa, December 31, 2019

Source: Refinitiv Lipper

South African Fund Flow Trends 2019

Generally speaking, the year 2019 was a tough year, with split results for some asset managers in the South African fund management industry. Nevertheless, the year can be generally considered as positive as mutual funds (+$9 bn) have enjoyed net inflows.

Graph 3: Estimated Net Sales by Asset Type 2019 (U.S. Dollar Billions)

Fund Market Review South Africa, December 31, 2019

Source: Refinitiv Lipper

Fund Flows by Asset Type*

A more detailed view by asset type reveals that not all asset types enjoyed inflows in 2019. Bond funds (+$5.4 bn) was the best-selling asset type, followed by equity funds (+$1.4 bn), money market funds (+$1.1 bn), mixed-assets funds (+$0.9 bn), commodity funds (+$0.2 bn), and alternatives funds (+$0.01 bn). Conversely, real estate funds (-$0.01 bn) was the only asset type with estimated outflows over the course of 2019.

Fund Flows by Sectors*

Bond ZAR (+$5.3 bn) was the best-selling sector overall for 2019, followed by Mixed Asset ZAR Aggressive (+$1.1 bn), Money Market ZAR (+$1.1 bn), Equity Global (+$1 bn), and Mixed Asset ZAR Conservative (+$0.7 bn).

Graph 4: The 10 Best and Worst Selling Sectors 2019 (U.S. Dollar Billions)

Fund Market Review South Africa, December 31, 2019

Source: Refinitiv Lipper

At the other end of the spectrum, Mixed Asset ZAR Balanced (-$0.9 bn) suffered the highest estimated net outflows overall, bettered by Mixed Asset USD Flexible Global (-$0.4 bn), Equity South Africa (-$0.3 bn), Equity Emerging Markets Global (-$0.2 bn), and Bond Global USD (-$0.2 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 $2.4 bn, was the best-selling fund promoter for 2019 overall, well ahead of Investec (+$1.2 bn), 10x (+$0.8 bn), Prescient Mng Co (+$0.7 bn), and Satrix Managers (Pty) (+$0.7 bn).

Graph 5: Ten Best Selling Promoters 2019 (U.S. Dollar Billions)

Fund Market Review South Africa, December 31, 2019

Source: Refinitiv Lipper

The views expressed are the views of the author, not necessarily those of Lipper or Refinitiv.

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