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Unit trusts

Author: Patrick Cairns|

20 May 2013 23:51

South Africa's biggest unit trusts

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Who are the giants?

Orapa – The South African collective investment industry is a peculiar beast. In a previous article, we examined the vast number of available funds and the problems this creates both for the investor and the image of the industry.

One doesn't have to dig a whole lot deeper to discover another stark fact about South Africa's unit trust market: although there are 988 funds and 47 fund managers, only a handful of them command the bulk of invested assets.

In order to illustrate this, we conducted an analysis of South African funds – those that must have at least 70% of their money in local assets. The total assets under management in this segment make up 93.5% of the industry total.

When one looks across all South African funds, the seven biggest fund managers are in a commanding market position. Together they control 59.9% of the industry. This is illustrated in the table below.

South Africa's largest collective investment scheme managers


Assets under management at 31 March 2013

Allan Gray


Investec Asset Management








Nedgroup Investments


Old Mutual






Source: ASISA

Allan Gray's position at the top is probably not surprising, given the reputation it enjoys. However, it is still remarkable when one considers that it only runs 6 funds, in contrast to the 48 managed by Stanlib, for instance.

In total, these companies manage 187 funds between them.

The dominance of these large companies has also become entrenched to some degree because they enjoy the benefits of big marketing budgets, well-paid business development teams and sophisticated distribution channels. Crucially, they also have established track records that take a long time for any newer player to match.

What that means for the industry is the subject of a separate article.

Taking the analysis a bit further, however, one can see that the sway held by a few significant players also carries over into the size of their funds. The ten largest South African unit trusts alone make up 24.9% of the entire market, and the top 20 funds 38.0%.

The largest South African unit trusts

Fund name

Assets under management at 31 March 2013

Allan Gray Balanced Fund

R 67.4bn

Absa Money Market Fund

R 56.5bn

Allan Gray Equity Fund

R 34.3bn

Standard Bank Money Market Fund

R 34.1bn

Coronation Balanced Plus Fund

R 33.1bn

Investec Opportunity Fund

R 30.9bn

Allan Gray Stable Fund

R 29.9bn

Standard Bank Corporate Money Market Fund

R 29.3bn

Investec Money Market Fund

R 23.6bn

Stanlib Income Fund

R 22.1bn



Source: ASISA

It's quite something to consider that 5.5% of an industry worth well over R1trn sits in a single fund. But such is the reputation of the Allan Gray Balanced Fund that it can command that level of sustained investment.

Taking the analysis into individual fund categories, the difference between the big funds and the others sometimes becomes even more stark.

Amongst South African general equity funds, for example, the Allan Gray Equity Fund is more than twice the size of the second largest South African general equity fund – the Coronation Top 20 Fund. The top five funds by size are listed below.

South African Equity – General Funds by size

Fund name

Assets under management at 31 March 2013

Allan Gray Equity Fund

R 34.3bn

Coronation Top 20 Fund

R 15.1bn

Nedgroup Investments Rainmaker Fund

R 15.1bn

SIS Equity Fund

R 10.5 bn

Old Mutual Investor's Fund

R 10.2bn


R 84.2bn

Source: ASISA

Just those five funds account for 36.7% of all the money invested in South African general equity unit trusts. And there are 154 other funds in the same category.

The South African Multi-Asset: Income category is even more starkly delineated between one big fund and the rest. There are 72 funds in this category, with total assets under management of R107.2bn. Yet R20.8bn or 19.4% of that is in the Coronation Strategic Income Fund. The next largest fund manages assets of R6.8bn.

Perhaps the two most interesting categories are also two of the most popular – South African Mutli-Asset: Low Equity and South African Mutli-Asset: High Equity.

There are 110 funds in the low equity category, with total assets of R154.6bn. The top five are shown in the table below.

South African Multi-Asset: Low Equity Funds by size

Fund name

Assets under management at 31 March 2013

Allan Gray Stable Fund

R 29.8bn

Coronation Balanced Defensive Fund

R 17.8bn

Absa Absolute Fund

R 17.3bn

Nedgroup Investments Stable Fund

R 17.3bn

Prudential Inflation Plus Fund

R 14.4bn


R 96.6bn

Source: ASISA

Those five funds alone hold 62.5% of all assets under management in this category. In other words, the other 105 funds have market share of just 37.5% between them.

What's even more revealing is that 32 of the remaining funds have assets of less than R100m each, and 44 manage between R100m and R500m. If one combined the assets of all of them, this would come to R13.2bn. In other words, still not even as big as the fifth biggest fund in the category.

The Allan Gray Balanced Fund has already been mentioned and it's worth illustrating what a colossus it is in the South African Multi-Asset: High Income category:

South African Multi-Asset: Low Equity Funds by size

Fund name

Assets under management at 31 March 2013

Allan Gray Balanced Fund

R 67.4bn

Coronation Balanced Plus Fund

R 33.1bn

Investec Opportunity Fund

R 30.9bn

Foord Balanced Fund

R 19.9bn

Old Mutual Balanced Fund

R 9.0bn


R 160.3bn

Source: ASISA

The total assets under management in this category come to R260.1bn. So once again, we have five funds making up the bulk of this – in this case 62.7%. The remaining 128 funds share less than R100bn between them.

It's also worth noting that the Allan Gray Balanced Fund attracted net inflows of R5.7bn in the first three months of this year. That 90-day inflow alone is bigger than the tenth largest fund in this category.

Even in terms of percentage growth, this is a strong showing. The Allan Gray Balanced Fund grew 9.3% in the quarter. The MET Odyssey Balanced FoF, which is one of the best-performing funds in this category grew 8.8% over the same period. But it has assets under management of just R222m.

The above analysis clearly shows that there is a lot in favour of the big players in the local unit trust industry. But it would be incorrect to assume that they have things all their own way.

It is far easier for smaller funds to be nimble in their strategies, and therefore more quick to take advantage of market movements. Particularly for multi-asset funds this can be a major advantage.

The questions this raises are whether South African investors are truly aware of the respective strengths and weaknesses of funds of different sizes, and indeed whether fund managers themselves are pursuing the right strategies.

That is a discussion that will be pursued in a follow-up article.

For more, visit Moneyweb's Click-a-unit trust/ETF tool.

Topics: unit trust, fund managers, Allan Gray, assets under management, investment insights

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