Following on from our Ecsponews article entitled, Fixed rates are growing in popularity, it was interesting to note that some of South Africa’s largest fund managers are facing increasing pressure amid market uncertainty. Faced with tough economic conditions and funds that deliver poor returns, investors are increasingly withdrawing from large fund managers.
According to half-year figures to the end of March this year, Coronation – one of the largest fund managers in South Africa – experienced a 6% decline in income to R1.9-billion, while profit was down 5%, to R763-million.
Coronation CEO Anton Pillay told Die Burger that the decline in the company’s income and profit could be attributed to a net outflow of R30-billion from portfolios that manage retirement funds.
According to Pillay, this outflow from Coronation’s retirement funds mirrors a net outflow in the wider retirement fund market. This means that South Africans are withdrawing more money than they are paying into their funds.
There was a decline in assets under management, which Pillay says is the direct result of the closure of three institutional portfolios. Together, these three portfolios accounted for almost 80% of institutional assets.
South Africans are under pressure
The investment industry enjoyed net inflows of R50-billion over the past four years. However, net inflows decreased to R4-billion in the six months to the end of March 2017. Pillay says difficult economic conditions, exacerbated by unemployment levels, resulted in a smaller inflow from ordinary investors. Many South Africans, he said, are finding it difficult to save.
Coronation is still one of the largest fund managers for ordinary investors. This is despite its market share declining from 15.2% in March 2015 to 12.8%. The company experienced good growth overall, it was the first time it experienced a net outflow.
At the end of March this year Coronation was managing assets of ordinary investors to the value of R226-billion.