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The SA unit trusts with the highest net outflows in 2020

Large multi-asset funds lose ground.
The Allan Gray Balanced Fund saw net withdrawals of R13.3bn but is still comfortably the largest unit trust in the country. Image: Supplied

Local investors appear to be losing some of their affinity for the country’s largest multi-asset unit trusts.

According to Morningstar data, eight of the 10 local funds with the highest net outflows last year are among South Africa’s 25 largest unit trusts overall. Four of them are in the top 10 by size.

All 10 of the funds that experienced the most substantial net outflows last year are multi-asset portfolios. Five are high equity funds, three are low equity funds, and there is one each from the multi-asset flexible and multi-asset income categories.

The largest

The biggest outflows were from the Allan Gray Balanced Fund, managed by Jacques Plaut, Duncan Artus and Ruan Stander, which saw net withdrawals of R13.3 billion last year.

To put the scale of these outflows in context, R13.3 billion is more than 97% of South Africa’s unit trusts currently have in assets under management (AUM).

The fund is, nevertheless, still comfortably the largest unit trust in the country. These net outflows represented 8.4% of its AUM at the start of 2020.

The fund with the second-highest net outflows last year is also the second-largest non-money market portfolio in the country. The Coronation Balanced Plus Fund, managed by Karl Leinberger, Adrian Zetler and Sarah-Jane Alexander, experienced net outflows of R7.7 billion in 2020.

This is despite the fund recording top quartile performance in its category over five years, second quartile returns over three years, and top quartile performance over one year.

Bucking the trend

Possibly the most surprising name on the list of funds with the highest outflows in 2020 is the Coronation Strategic Income Fund. The portfolio, managed by Nishan Maharaj and Mauro Longano, sits in the Asisa (Association for Savings and Investment SA) South Africa multi-asset income category.

This category has, in aggregate, seen substantial investor interest over the past few years, and that continued in 2020. This particular fund, however, saw net outflows of R3.3 billion last year.

The Coronation Strategic Income Fund remains easily the largest fund in this category and one of the 10 largest unit trusts in the country, at R44.5 billion. However, its latest fact sheet shows that it had underperformed its benchmark over the past year and three years to the end of November.

It is also a bottom quartile performer in the category over those two time periods. It is, however, in the second quartile over five years.

Read: South Africa’s most expensive unit trusts

For the full list of the top 10 South African unit trusts, excluding money market funds, that saw the largest net outflows last year, please scroll through the following slides.

Patrick Cairns is South Africa Editor at Citywire, which provides insight and information for professional investors globally.

This article was first published on Citywire South Africa here, and republished with permission.

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Any chance of completing this article by getting some sample reasons from investors as to why they withdrew from the funds?
Would help us simple folk make decisions…..

I think because most funds and the JSE overall did not do well the last 2 years some investors panicked and sold off their unit trusts, locking in their loss. Instead of buying they sold. Now the market is picking up, hopefully it will stay?

But, I do not know much about these things.

The largest funds with a relatively high equity exposure will naturally see the biggest outflows considering the Covid-19 backdrop. A better comparison would be to compare the relative net outflows between funds and not ZAR.

‘Admin and handling’ fees probably to high

Yet another article that will probably lead to ignorant investors making irrational decisions and realise losses (when now is arguably an opportune time time to buy into some of these stalwart funds).

And what happened to Charles de Kock’s face??

These guys need to be clobbered. The category is called “Multi-Asset”

The fund managers do not seem to understand this phrase or their mandate. Over a two period they should not have worse performance in an income fund.

…. performance than in an income fund.

“The fund managers do not seem to understand this phrase or their mandate”!! Really. Maybe it is you that doesn’t understand?

@Colson I understand very well they have the freedom to get out some no-hope equities.

I think you’re right. They’re equity managers who give little thought to the other asset classes.

BearMarketBoy That’s rubbish.

Those percentage losses from Coronation look rather large.

No surprises.

We have several forces at play here, the retail investor is moving to the lower cost providers and smaller/boutique providers. More DIY investors, less use of IFAs. The platforms for instance Allan Gray only use big names the ‘safe’ association, DIY can pick maybe just as well as IFAs and are using cheaper platforms; Easy Equites, Sygnia etc.
The last yet more concerning is how much are the withdrawals due to retrenchments and the like

I bet you these terrible useless ifas who just steal comm have made their clients more money than the self investors. Why see doctors just fix yourself alot cheaper also knowledge doesn’t matter as long as you save on costs

Various factors were (and are) usually at play here. Some being due to repeatable human behavioural reactions. The investor (private or a decision maker on behalf of another fund such as a retirement fund that invest in unit trusts) mostly demonstrate after the fact knee-jerk panic-stricken reactions to severe market corrections by exiting a unit trust and moving the diminished money to a safe haven such as a money market fund. Some informed investors react reasonably soon after such market event when the knock-out is most probably the worst. Others who are initially un-informed or who suffer from initial denial and in-action, have a after-shock reaction which follows the first wave by up to six months onwards (usually with a lesser knock-out or diminishing effect). Which ever reaction is statistically both bad on finances. This is usually the natural human behaviour when the investor do not understand why a wisely allocated portion of his/her total investable funds are in a specific fund and that as an investor you should only consider to exit such fund (proportionately or in total) when the stock markets are in a general high position (over-bought or over-extended index levels) and only then – such as is currently the case (latter part of January 2021. If an investor understand this rather basic principle of investment mush less damage will be self-inflicted damage. Just a contribution.

My first guess would be that lots of people sold out of the Coronation Strategic Income Fund because that’s where they kept their emergency fund, in cash and bonds, and if Covid lockdown is not an emergency I don’t know what is. My second guess would be that people saw a buying opportunity last year to rotate from cash and bonds into depressed equity prices, taking advantage of the sell-off by fearful people. Third guess, those fearful folks who sold out of the multi-asset funds will now be the same ones piling back into the JSE while it is at record levels.

End of comments.

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