Funds in the ASISA South Africa multi-asset low equity category have fallen somewhat out of favour over the past few years. As these strategies have struggled to deliver real returns, investors have instead preferred the yields available in multi-asset income funds.
At the end of June 2017, there was a total of R225.1bn invested in funds in this sector. That had fallen to R211.6bn by the end of the second quarter this year, according to the latest ASISA statistics.
For the 12 months to the end of September 2020, data from Morningstar indicates that funds in this category experienced cumulative net outflows of R17.6bn. It is notable that this included substantial outflows from four of the sector’s five largest portfolios.
The Prudential Inflation Plus fund saw net outflows of R7.3bn, the Allan Gray Stable fund R5.6bn, the Coronation Balanced Defensive fund R4.4bn, and the Nedgroup Investments Stable fund (managed by Foord Asset Management) R1.8bn.
This is despite three of these funds – with the Prudential Inflation Plus fund being the exception –out-performing the category average over the past five years. The Nedgroup Investments Stable fund is in fact a top 10 performer over this time period.
The scale of the outflows from these large funds is predominantly what has skewed the flows for the category overall. This is evidenced by the fact that the number of funds that saw net outflows over the past 12 months is only slightly higher than the number that received net inflows.
In total, 87 South Africa multi-asset low equity funds took in net inflows, while 91 experienced net outflows.
Those funds that saw the highest net inflows also tended to smaller portfolios. The exception is the Ninety One Cautious Managed fund, which is the fourth largest fund in the category and also a top 10 performer over the past five years.
Four of the 10 funds with the highest inflows over this period are smaller than R2bn in total assets under management (AUM). Eight of them are under R5bn in size.
Notably, a number of these funds took in substantial investments relative to their overall AUM. Most significantly, the Amplify SCI Wealth Protector fund, managed by Truffle Asset Management, more than doubled its AUM over this year.
It took in net inflows of R788m, to lift the total invested in the portfolio to R1.3bn.
The Absa Inflation Beater fund also received meaningful additional investment relative to its size. It saw net inflows of R773m, according to Morningstar, to end the period with AUM of R1.5bn.
Both of these funds are top five performers in this category over the past three years.
To see the full list of the top 10 South Africa multi-asset low equity unit trusts with the highest net inflows over the past 12 months, click through the slides.