In line with the general global trend regarding fund flows, the South African fund industry enjoyed estimated net inflows of $71 bn over the course of the first nine months of 2020. These inflows were kind of a surprise since the outbreak of the coronavirus pandemic and the global lockdowns of economies led to a massive drawdown on the equity markets during Q1 2020. This was countered, however, by very large cushioning packages of governments and quantitative easing programs of central banks around the globe. Nevertheless, the first nine months of 2020 was a tough time for the South African fund industry and one would not expect to see net inflows into mutual funds in such an environment.
Assets Under Management in the South African Fund Industry
Assets under management in the South African fund industry decreased from $190.8 bn (December 31, 2019) to $167.2 bn (September 30, 2020). This decrease was driven by the performance of the underlying markets, which contributed a negative $30.8 bn, while net sales contributed inflows of $7.1 bn. It is noteworthy that the market performance is also impacted by the conversion from the South African rand to the U.S. dollar (the standard currency for this report).
Graph 1: Assets Under Management in the South African Fund Industry (U.S. Dollar Billions)
Source: Refinitiv Lipper
Mixed-assets funds ($75.3 bn) were the asset type with the highest assets under management at the end of September 2020, followed by equity funds ($36.8 bn), bond funds ($28.4 bn), money market funds ($23.2 bn), alternatives funds ($2.8 bn), commodities funds ($0.7 bn), and real estate funds ($0.003 bn). It is noteworthy that $4.2 bn of the overall assets under management ($167.2 bn) were held by exchange traded funds (ETFs).
Graph 2: Market Share by Asset Type (September 30, 2020)
Source: Refinitiv Lipper
South African Fund Flow Trends Year-to-Date Q3 2020
Generally speaking, the first nine months of 2020 were a tough period, with split results for asset managers in the South African fund management industry. Nevertheless, the year 2020 can so far be generally considered as positive since mutual funds (+$7.0 bn) and ETFs (+$0.1 bn) enjoyed net inflows.
Graph 3: Estimated Net Sales by Asset Type Year-to-Date Q3 2020 (U.S. Dollar Billions)
Source: Refinitiv Lipper
Fund Flows by Asset Type*
A more detailed view by asset type reveals that only two of the seven asset types covered in this report enjoyed inflows over the course of the first nine months of 2020. Bond funds (+$4.5 bn) was the best-selling asset type, followed by money market funds (+$3.4 bn), while real estate funds (-$0.002 bn), commodities funds (-$0.1 bn), alternatives funds (-$0.1 bn), mixed-assets funds (-$0.3 bn), and equity funds (-$0.4 bn) faced estimated outflows over the first nine months of 2020.
Fund Flows by Sectors*
Bond ZAR (+$4.5 bn) was the best-selling sector overall for the first nine months of 2020, followed by Money Market ZAR (+$3.4 bn), Mixed Asset ZAR Flexible (+$0.3 bn), Mixed Asset ZAR Aggressive (+$0.3 bn), and Mixed Asset USD Balanced – Global (+$0.1 bn).
Graph 4: The 10 Best and Worst Selling Sectors Year-to-Date Q3 2020 (U.S. Dollar Billions)
Source: Refinitiv Lipper
At the other end of the spectrum, Mixed Asset ZAR Balanced (-$0.8 bn) suffered the highest estimated net outflows overall, bettered by Equity Global (-$0.5 bn), Mixed Asset USD Flexible Global (-$0.3 bn), Bond Global USD (-$0.1 bn), and Commodity Precious Metals (-$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
Ninety One, with net sales of $2.2 bn, was the best-selling fund promoter for the first nine months of 2020 overall, ahead of Nedgroup (+$1.4 bn), ABSA (+$0.7 bn), Stanlib (+$0.6 bn), and Boutique Collective Inv (+$0.4 bn).
Graph 5: Ten Best Selling Promoters Year-to-Date Q3 2020 (U.S. Dollar Billions)
Source: Refinitiv Lipper
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The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.
