Backers ditch cash for equities

Johannesburg - Investors started abandoning money market unit trust funds during the third quarter of this year in favour of other unit trusts providing some equity exposure.

As a result local money market unit trusts experienced net outflows of R5.8bn for the quarter, the highest in five years.

In the five year period ended this September there were only three other quarters during which money market unit trusts posted net outflows.

Quarterly statistics released this week by the Association for Savings and Investment South Africa (Asisa) for the local collective investment schemes industry showed that investors are finally ready to trade the perceived safety of cash for the potentially higher returns of equities.

But unfortunately, said Leon Campher, CEO of Asisa, most individual investors missed out on much of the strong recovery experienced by equities in recent months.

While institutional investors were moving back into equities during the second quarter of this year already, individual investors were still placing the bulk of their money with money market unit trust funds.

Campher said as a result most individual investors did not participate in the 37.5% growth achieved by the All Share Index (Alsi) from its lows in early March this year to the end of September.

In Rand terms, compared to the SP500 and the FTSE100, the Alsi was the best performing index for the past 12 months ended September this year, with a return of 4.51%.

Campher said the local collective investment scheme industry attracted net flows of R99bn over the 12 months to the end of September this year, bringing total assets under management to R747bn.

- I-Net Bridge.com