ASISA: Investors braving volatility for the potential of higher returns

The Association for Savings and Investment South Africa (ASISA) recently reported almost R150 billion in net flows for the country's Collective Investment Schemes industry in the past 12 months, signaling a significant trend in investment and savings patterns. Sunette Mulder, Senior Policy Adviser at ASISA, discussed the implications of these numbers in a recent interview with CNBC Africa. Mulder highlighted that the first quarter saw the third highest quality flows in the last five years, indicating a growing awareness among South Africans about the importance of saving for the future. She noted that these inflows reflect people's efforts to achieve their savings goals and prepare for retirement. While South Africa has historically had low saving rates, Mulder suggested that current uncertainties might be prompting individuals to adopt a more cautious approach to long-term wealth creation. The popularity of short-term interest-bearing portfolios and money market funds in the past year further reinforces this 'wait and see' sentiment among investors. The post-election period also witnessed increased activity, particularly in the short end of the bond market, signaling improved sentiment towards South Africa. However, Mulder indicated that the full impact of the elections on investment flows would be more robustly reflected in the forthcoming quarterly data. ASISA oversees a diverse range of portfolios, including multi-asset, equity, and real estate portfolios, offering investors a wide array of options to choose from. While recent trends have favored short-term investments, longer-term performance data indicates the enduring strength of equity and high-equity multi-asset portfolios over extended periods. Looking ahead to the second quarter, Mulder expressed a need to analyze the forthcoming data to gauge investor sentiment in the current global economic landscape. The uncertainty surrounding global conditions adds a layer of complexity to predicting future investment patterns, necessitating a vigilant approach to monitoring market dynamics. Mulder's insights provide a glimpse into the evolving investment landscape in South Africa and the factors shaping investor behavior amidst ongoing volatility. ASISA's upcoming quarterly report is poised to offer a more comprehensive view of the industry's performance and shed light on emerging trends that could influence investment decisions moving forward.