Page 31 - Profiles's Unit Trusts & Collective Investments - September 2024

History of Collective Investment Schemes

Chart 1.1 unit trusts as their underlying assets. Where unit trusts had
been seen as relatively high-risk investments which would
Total Industry Assets
(excl offshore funds) have been considered as an addition to a retirement funding
plan, prudential unit trusts opened the door for unit trusts
R million Growth % as a core component of lifetime investment towards
Jun 2024** 3 638 649 4.0% retirement. Unit trusts had evolved to a point where they
would begin competing with traditional pension funds and
Dec 2023* 3 498 511 11.4%
retirement annuity funds, at least at an asset management
Dec 2022* 3 141 310 0.1% level.
Another new phenomenon in this area was the launch
Dec 2021* 3 139 091 15.0%
of prudential funds aimed not at individual investors, but
Dec 2020* 2 730 460 9.9% at institutions and pension funds. The Standard Bank
Managed Fund, for example, was launched on
Dec 2019* 2 484 228 10.8%
1 August 1996 with a minimum lump sum investment of
Dec 2018* 2 241 369 -0.4%
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 6.0%
which are now available. These are marketed within the
Dec 2015* 1 889 643 11.5% 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
Dec 2012* 1 199 808 20.5% a way to invest in the share market – the institutional unit
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.
Dec 2006 546 656 32% Until the end of the ’80s, unit trust investment was
strictly a South African affair for most investors. In Europe
Dec 2005 415 131 36%
and America, however, a trend towards international
Dec 2004 305 945 33% diversification had already been established. This was the
logical extension of the well-established principle of
Dec 2003 230 344 28%
diversification. Diversification lowers risk. Diversification
Dec 2002 179 826 3% across countries, as well as asset classes further reduces risk.
Dec 2001 174 588 38% Changes in foreign exchange policy around the world
facilitated products which allowed Americans to invest in
Dec 2000 126 907 13%
Europe and vice versa. Although South Africa lagged behind
Dec 1999 112 780 58% when it came to foreign exchange control, the benefits of
geographic diversification – and the appeal of investing in
Dec 1998 71 279 16%
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
* Since 2010 ASISA figures exclude all
cross-holdings; historical figures would have trade. This included most of South Africa’s major exporters.
been slightly lower on the same basis. Deregulation of foreign investment was introduced in
** Six months, not annualised several stages. The first relaxation, in July 1995, allowed
institutions (not individuals) to take 5% of their assets

Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts 29