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Press Offices > Associations

Association for Savings and Investment South Africa
Press Office Feature : Local unit trusts reach major milestone with 50th anniversary

Company: Association for Savings and Investment South Africa
Author:Lucienne Fild
Email:[email protected]
Posted:05 Oct 2015

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It is the time in the market that will get you the returns you want and not timing the market

The South African collective investment schemes (CIS) industry celebrates its 50th anniversary this year.

The country’s first unit trust portfolio was launched in June 1965 with assets under management of R600 000.

Half a century later, at the end of June 2015, the industry offered investors 1 225 unit trust portfolios boasting assets under management of R1.8 trillion. 
 
The industry reached this major milestone at the end of June without much fanfare. But, says Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA), it is important to acknowledge the achievements of the local CIS industry over the past 50 years.
 
50 years of unit trusts
 
Campher makes the observation that in the first 30 years of its existence the industry grew at a very slow pace. From 1965 to 1995, the CIS industry launched only 84 unit trust portfolios and grew assets under management to R27 billion.
 
“The stock market crash of 1969, exasperated by the global oil crisis in 1973, resulted in a seven year bear market – the longest in the history of South Africa. Not surprisingly, at the time investors therefore preferred interest-bearing investments to equities. This meant there was little appetite for South Africa’s newly launched unit trust portfolios.”
 
It is noteworthy, says Campher, that the local CIS industry experienced its most significant growth spurt only after South Africa transitioned to a real democracy.
 
“After 1994, the new democratically elected Government opened up the economy and introduced free market policies. In addition, the corporate tax rate was halved over the past 20 years, from 55% to 28%.”
 
As a result, in the 10 years from 1 July 1995 to the end of June 2005, the number of portfolios increased almost sevenfold to 570 and assets grew to R384 billion. From 1 July 2005 to the end of June 2015, the number of portfolios more than doubled to 1 225, with assets under management at a historic high of R1.8 trillion.
 
Campher says assets managed by the local CIS industry exceeded the R1-trillion mark for the first time at the end of March 2012.

“It was a proud moment when assets under management stood at a record breaking R1.02 trillion at the end of the first quarter 2012, from R996-billion at the end of December 2011.” At that point the number of portfolios was 945.
 
South African CIS industry – Growth over 50 years

Date

Assets under Management

Number of Portfolios

Number of CIS companies

June 1965

R600 000

1

1

June 1975

R353 million

11

11

June 1985

R1.3 billion

13

9

June 1995

R27 billion

84

18

June 2005

R348 billion

570

26

June 2015

R1.8 trillion

1 225

48

Time in the market
 
Campher started his career at Old Mutual in 1973 and over the next 40 years experienced five significant stock market crashes, namely the Crash of 1969, Black Monday in 1987, the Asian Crisis in 1997, the Dotcom Crash in 2001, and the Subprime Crisis in 2008.
 
“Despite these five major events that sent stock markets around the world into free fall for a period of time, markets not only recovered losses every single time, but they also reached new heights.

Therefore, the best advice I can give to unit trust investors is that it is the time in the market that will get you the returns you want and not timing the market.”
 
South Africa’s first unit trust portfolio, the South African Growth Equities (SAGE) Fund, was launched on 14 June 1965. The Sage Fund survived a number of mergers and acquisitions and still exists today.

Known as the Momentum Equity Fund, South Africa’s oldest unit trust portfolio is now part of the MMI stable.
 
South Africa’s second oldest unit trust portfolio – the National Growth Fund – was launched on 15 October 1965. This portfolio was taken over by Sanlam very early in its existence and after a few mergers is today known as the Sanlam Investment Management (SIM) General Equity Fund. 
 
One of the country’s oldest unit trust funds that never changed hands is the Old Mutual Investors’ Fund launched in October 1966.
 
While all three funds would have experienced the five significant stock market crashes referred to earlier, their historic performance figures prove Campher’s point that “it is the time in the market that will get you the returns you want and not timing the market”.
 
Performance statistics provided by the respective CIS management companies show that R100 invested in one of these three funds in the month that they were launched would have grown to between R133 311 and R275 756 by the end of August 2015 depending on the fund selected.

This means that investors who invested R100 into one of these portfolios some 50 years ago and left the money to grow would have benefitted from an annualised return of between 16.1% and 17.6% despite the five significant stock market crashes.

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