Page 71 - Profile's Unit Trusts & Collective Investments - March 2026

The CIS industry Chapter 4

Chapter 4

The CIS industry
NQF
Relevant to
The main players in the CIS industry are the management companies 243135: 3
(or more correctly CIS managers), the trustees, the asset managers, the 243147: 1 - 4
agents and brokers, and the regulatory authorities. This chapter looks 243155: 1, 2
at the structure of the industry and the roles of each of the main players.

Management companies
The management company, or “manager” as it is more correctly referred to under CISCA, is the
central coordinating element of a collective investment scheme (CIS). It is usually the company
that launches a CIS, and which maintains overall responsibility for administration, appointing asset
managers, appointing trustees, and the marketing of the fund to investors. While some of these
functions might be outsourced, it is the CIS manager who directs activities.
Most of the older management companies started as insurance companies (Old Mutual,
Sanlam, Liberty) or banks (RMB, Absa, Standard Bank). Changes in legislation also broadened
the participation in the industry, allowing new players, like institutional fund managers Allan Gray
and Coronation, to launch unit trust funds. More recently it has become common for boutique asset
managers to launch their own suites of unit trusts, usually with the help of third-party administrators.
Media coverage of unit trusts in financial magazines and the newspapers is disproportionate to
the size of the unit trust industry. Assets held by the pension fund industry, for example, are roughly
one-and-a-half times those of collective investment schemes, and both are dwarfed by the market
capitalisation of the JSE. But in spite of its smaller size as an industry, collective investments get a
lot of attention online and in the press.
One reason for this is that unit trusts are seen as the “shop window” of the asset management
business. An investment house’s unit trusts are the most visible display of their overall investment
expertise – and sometimes the same asset management team controls the life products and the
unit trust portfolios. Even where this is not the case, the performance of unit trusts, which have
relatively strict disclosure requirements, are used (rightly or wrongly) as a barometer for the success
of the asset management skill of fund managers in other investment arenas at the same company.
There are no equivalent industry accepted performance league tables for the life insurance industry
or the pension industry.
An interesting trend in asset management companies
has been the use of “outsourcing”. Outsourcing of fund Boutique funds
management began in the early 2000s and has become
more popular, for different reasons, since then. The first The term boutique is a popular prefix,
company to outsource fund management was a bank whether affixed to hotels, banks
with a loyal client base, which realised that they had a or vintners. In the financial world
captive market for a range of investment products, and it denotes a small, specialised investment firm.
no in-house expertise in this area. Introducing unit trust Boutique fund managers usually focus on narrow
funds, the management of which was outsourced, was market segments which are not fully serviced by
a neat solution. larger companies. Typically, boutique fund managers
are nimble compared to heavyweight funds. They
One of the more recent drivers in the outsourcing trend are usually run by small teams or individual asset
has been the shortage of experienced fund managers. managers, allowing for quick decision-making and
Outsourcing of the administrative component of unit prompt implementation of portfolio strategies.
trusts has also become popular. For many years new Often the investment team are the owners of the
entrants in the industry were deterred by the need to business, and therefore more directly affected by
have teams of staff members and technical systems fund performance than their counterparts in larger
in place to handle the administrative side of unit trust investment houses.

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