Page 36 - Profile's Unit Trusts and Collective Investments 2021 issue 2

CHAPTER 1

Chart 1.1 prudential unit trusts opened the door for unit trusts as a
core component of lifetime investment towards retirement.
Total Industry Assets
(excl offshore funds) Unit trusts had evolved to a point where they would begin
competing with traditional pension funds and retirement
annuity funds, at least at an asset management level.
R million Growth %
Jun 2021** 2 885 998 5.70% Another new phenomenon in this area was the launch
of prudential funds aimed not at individual investors, but
Dec 2020* 2 730 460 9.91% at institutions and pension funds. The Standard Bank
Dec 2019* 2 484 217 10.83% Managed Fund, for example, was launched on
1 August 1996 with a minimum lump sum investment of
Dec 2018* 2 241 369 -0.42%
R500 000 and an initial charge of only 2% (lower for larger
Dec 2017* 2 250 722 12.3% amounts), which at the time was very cheap. These were
the precursors of the many institutional unit trust funds
Dec 2016* 2 003 594 6.11%
which are now available. These are marketed within the
Dec 2015* 1 888 189 11.4% industry, and are not available to private investors.
Performance data on institutional funds is often not
Dec 2014* 1 694 795 13.1%
even published in the press. Given the historical origins of
Dec 2013* 1 499 054 24.9% unit trusts – vehicles designed to give the man in the street
a way to invest in the share market – the institutional unit
Dec 2012* 1 199 808 20.5%
trust, arguably the grandchild of the first prudential fund,
Dec 2011* 995 687 7.4% was a significant development.
Dec 2010* 927 227 18%
The Effect of Globalisation
Dec 2009 786 117 19%
Another trend which has dramatically changed the
Dec 2008 661 201 1%
character of the unit trust industry since the early ’90s is
Dec 2007 653 463 20% the increasing global awareness of investors.
Until the end of the ’80s, unit trust investment was
Dec 2006 546 656 32%
strictly a South African affair for most investors. In Europe
Dec 2005 415 131 36% and America, however, a trend towards international
diversification had already been established. This was the
Dec 2004 305 945 33%
logical extension of the well-established principle of
Dec 2003 230 344 28% diversification. Diversification lowers risk. Diversification
across countries, as well as asset classes further reduces risk.
Dec 2002 179 826 3%
Changes in foreign exchange policy around the world
Dec 2001 174 588 38%
facilitated products which allowed Americans to invest in
Dec 2000 126 907 13% Europe and vice versa. Although South Africa lagged
behind when it came to foreign exchange control, the
Dec 1999 112 780 58%
benefits of geographic diversification – and the appeal of
Dec 1998 71 279 16% investing in offshore assets – soon made an impression on
local investors.
Dec 1997 61 652 41%
Due to exchange control regulations, the first
Dec 1996 43 790 30% “international” funds which were established in South
Africa – in the early ’90s – were not able to invest offshore.
Dec 1995 33 695 28%
Instead, these funds focussed on high-quality JSE
Dec 1994 26 326 35% companies which owned significant offshore operations, or
derived material contributions to profits from overseas
Dec 1993 19 451 44%
trade. This included most of South Africa’s major exporters.
Dec 1992 13 480 18%
Deregulation of foreign investment was introduced in
Dec 1991 11 397 51% several stages. The first relaxation, in July 1995, allowed
institutions (not individuals) to take 5% of their assets
* Since 2010 ASISA figures exclude all
cross-holdings; historical figures would have offshore via an asset swap mechanism. Unit trust
been slightly lower on the same basis. management companies had to comply with government
** Six months, not annualised restrictions which placed a 5% limit on “foreign” investment

34 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts