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June 11 (The following statement was released by the rating agency)
Fitch Ratings says in a new report that the South African mutual fund industry has experienced substantial growth, dominated by inflows to multi-asset funds as investors seek higher yielding products. The share of multi-asset funds is now just under half of the South African mutual fund industry, compared with 25% at end-2010. The sector accounted for over 75% of domestic mutual fund net inflows over a three-year period to 1Q14.
The South African asset management industry is more concentrated than the European industry. Over a three-year period to 1Q14, the top five European asset management firms (by assets) received around a third of total industry inflows into bond and multi-asset funds and 50% into equity funds. By contrast, over the same period, the top five mutual fund managers in South Africa accounted for about 60% of the total industry inflows.
Fitch estimates that the top five managers in Europe accounted for around 15% of total European-domiciled mutual fund assets at end-March 2014, compared with the top five managers accounting for around 60% of South African assets.
The South African asset management industry had ZAR1.4trn of assets under management at end-March 2014, according to the Association for Savings and Investment South Africa. This represents a 54% increase over a three-year period. The industry has grown quarter on quarter for 20 straight quarters. Post the increase in the South African repurchase rate in late January 2014, fixed income funds showed resilience by not only avoiding outflows but registering inflows of around ZAR400m, according to Lipper data, while money market funds continued to see outflows. The global trend of corporate treasurers selectively reallocating some cash from money market funds to slightly longer duration fixed income products is also visible in South Africa against a backdrop of negative real returns to cash.
The full report, "Asset Management in South Africa - Multi-Asset Funds Driving Industry Growth", is available on www.fitchratings.com or by clicking on the link below.
Link to Fitch Ratings' Report: Asset Management in South Africa - Multi-Asset Funds Driving Industry Growth