Money keeps rolling in | Fin24
 
  • Data Market Inquiry

    MTN says it is prepared to defend itself before Competition Tribunal over report.

  • Claims of sabotage

    What we know so far about allegations of sabotage at an Eskom power station.

  • Dudu Myeni

    Court dismisses former SAA chiar's bid to have Outa withdraw from delinquency case.

Loading...

Money keeps rolling in

Oct 06 2010 14:44

Related Articles

Unit trusts: where to invest

 
Latest unit trust inflow figures released at the time of writing show that money market funds continue to attract large inflows, nearly a third of the total inflow.

Net industry inflows for the second quarter to end-June were R24.2bn, according to the Association for Savings and Investment SA (Asisa).

Local asset allocation funds attracted the largest inflow – R8.7bn – followed by money market funds with 7.7bn.

Only R855m was invested in domestic equity funds.

This concerns Leon Campher, CEO of Asisa, who fears investors are taking the comfort of stable returns from fixed interest investments at the expense of protecting capital against inflation over the long term.

He points out that general equity unit trust funds returned 19% for the year to end-June, while money market funds came in at 8%. He adds that five-year sector performance paints a similar picture.

What he doesn’t show is three-year performance as we do on our tables, where money market unit trust funds beat everything else.

Campher is quite correct that investors need a well-balanced portfolio that includes equities for long-term growth.

Our tables show the value of asset allocation across all the major asset classes. Had investors stuck to equity investments through the market downturn, getting protection from money market funds, they would be in a good position now.

One possible concern about money market and fixed interest funds that Campher points out is that money not committed to long-term investments remains easily accessible and as a result is often used to finance consumption.

That’s a potential danger, but just underscores the need for investors to be disciplined.

Campher says consumers continue to believe that stock market volatility is the biggest enemy of their retirement capital, while it’s actually inflation they need to fear. “As a result we see investors being so defensive in their investment strategies that they sacrifice future inflation-beating growth for immediate stability and peace of mind.”

But that’s what we’ve tried to show in this investment guide. Used for the right investment reasons, money market funds can be a valuable part of a portfolio.


 - Finweek

investment  |  money market
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.
 

Company Snapshot

Voting Booth

How concerned are you about ransomware attacks?

Previous results · Suggest a vote

Loading...