Advertise Here
Icon

Directory

IconAlternative Investments
IconAsset Managers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconInvestment Consulting
IconLinked Investment Service Providers
IconListed Equities
IconOmbud
IconOnline Share Trading
IconParticipation Bond Managers
IconProperty Unit Trusts
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Saving a battle, despite unit trust data – STANLIB

Published

2006

Thu

23

Mar

 
Trend is away from long-term wealth consolidation - man in street saving close to zero Positive media coverage of unit trust industry growth is in danger of leading to a false sense of security on the savings front. The warning comes from STANLIB, a wealth company well-placed to know. It is South Africa’s largest unit trust company with over R260 billion of savings assets. Dylan Evans, STANLIB’s director of investment marketing, cautions that recent headlines showing a recent, modest improvement in unit trust inflows may create the false impression that we are serious about saving. In fact, the average South African still saves less than 1% of disposable income. Yet 2005 statistics show that total assets held by unit trust holders is up to R415 billion – sixfold growth on the R71 billion held in unit trusts in 1998. Dylan Evans notes: “On a surface reading, you might assume that more and more unit trust savers are squirreling away more and more money for a rainy day. It’s just not so.” To obtain a clearer picture, says Evans, equity`s role as the bedrock of long-term saving has to be appreciated. Seen in this light, the statistics are worrying as they suggest a trend away from long-term wealth consolidation. In 1998, notes Evans, there were more than 2 500 000 unit holder accounts. More than 2 225 000 of them fell into the general equity and specialist equity categories. In other words, 89% of unit holders were committed to long-term savings vehicles. Another 4% of accounts was invested in long-term balanced funds; 3% in fixed-interest funds and just 4% in money market funds. Evans adds: “Unfortunately, since 1998 the number of unit holders investing for the long term has plummeted. By the end of last year, if we consider domestic funds, the number of unit holder accounts in equity funds had fallen to just 1 275 000; a decline of nearly one million or over 40%.” Unit holders lost to equities are not flooding into other long-term investments. Since 1998, the number of accounts held in managed funds has risen from 109 000 to just 136 000. The number of fixed-interest investment accounts has risen from 70 000 to 120 000, a marginal annualised increase. The big winner has been money market funds. Seven years ago, there were 105 000 money market accounts, 4% of the total. By 2005, there were 635 000, nearly 30% of the total. These accounts also represent a similar percentage of total assets. Says Evans: “Money market funds are useful and efficient, but no one could argue they are long-term investments. They are a substitute for call accounts.” He concludes that the collective investments industry has been “steadily bleeding” long-term savers. Other savings options are hurting, too. Evans adds: “Since 1998, there has been no organic growth in the retirement fund industry. When assets are adjusted for market growth, the life industry has been treading water as well. “The man in the street’s savings ratio – savings as a percentage of disposable income – is close to zero. “The savings habit has been superseded by the spending habit; here the explosion in debt products is a key indicator. “Spending is sweeter than saving. It will be a tough habit to kick. The savings industry should be under no illusion. Building a savings culture will be a battle.”
 
Source: Carol Dundas
 
« Back to previous page Print this page » |
 

Breaking News »

FNB announces TaxTim as a new eBucks Rewards partner

FNB has announced a new partnership with online tax solution firm TaxTim, the latest partner to join its eBucks Rewards programme. FNB and RMB Private Bank customers can now earn up to 50% of the cost of their ...
Read More »

  

Want to withdraw retirement funds on emigration? National Treasury and SARS say try again in 3 years' time

            by Joon Chong, Partner & Wesley Grimm, Associate at Webber Wentzel   The National ...
Read More »

  

Why female investors are on the rise

Research shows that certain gender-based qualities give women a natural advantage in long-term investing. Stonehage Fleming Investment Management in South Africa reported a 35% rise in female investor clients over ...
Read More »

  

SOUTH AFRICAN WOMEN’S INDIVIDUALISED FINANCIAL JOURNEY

Balancing work and home life has always been challenging, but our new normal has had an even greater impact on our personal lives, affecting our families, livelihoods, well-being and health. As women in South Africa, ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Advertise Here

From The Glossary »

Icon

Reuters:

International news and quotation service based in London.
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2020. All Rights Reserved.