To invest or not to invest in unit trusts? If this was the question on the
minds of investors this past quarter, most reacted by keeping their money
under their mattresses.
At R3,9 billion, new cash inflows into unit trust funds were a mere
trickle for the quarter ending September 30, 1999 - with most rands (R3,74
billion) headed for money market funds. Inflows into traditional
longer-term unit trusts were at a low of R181 million this quarter.
Total assets in the unit trust industry now stand at R93,9 billion - down
from last quarter`s R95,7 billion.
While the facts and figures may be simple calculations, the reasons behind
the unenthusiastic behaviour of investors this quarter, and their
reluctance to invest new money into unit trusts, are not as easily
decipherable.
i Turpin, of Old Mutual Unit Trusts and deputy chair of the Association
of Unit Trusts (AUT), says Old Mutual`s analysis of assets under
management clearly shows investors preferred the money market sector and
rand-based foreign funds this quarter.
She says this and the relatively poor inflows into the industry show that
investors were nervous.
"In both cases they opted for safe hedges."
But Turpin says it is anyone`s guess why investors were nervous.
"Perhaps they were paying off debt or putting money into their bonds - in
which case it is very good news. After all, interest rates were still
quite high for much of the quarter. They only started to come down in the
latter part.
Y2K fears may also have played a part in the decisions of some."
As far as overseas investments are concerned, investors may also have
reacted nervously to the Dow and what has been happening in the United
States, she says.
While many fund managers may have been positive about the local market
his quarter, Turpin says it usually takes a while for investors to come
around.
"And, sadly, they often miss the boat."
The AUT, in its assessment of the past quarter, notes that investors
switched between funds quite a bit, seeking better performance prospects,
or moving to lower risk environments, such as money market funds.
Significant outflows also occurred from growth and smaller companies
funds, due to their poor performance - another indication that some