The South African Collective Investment Schemes (CIS) industry ended 2024 on a high note, with assets under management reaching R3.87 trillion—a 10.8% increase from R3.49 trillion in December 2023. This growth, driven by a strong performance in the stock market, reflects the resilience of the sector despite challenging economic conditions. However, local investors remain cautious, with net outflows of R35.25 billion recorded during the year.
Strong Market Performance Drives Growth
The JSE All Share Index delivered a 13.4% return over the 12 months to December 31, 2024, contributing significantly to the growth of the CIS industry. Sunette Mulder, senior policy adviser at the Association for Savings and Investment South Africa (Asisa), highlighted that assets under management have grown by 42% (R1.14 trillion) over the past four years, up from R2.73 trillion in 2020.
“The local CIS industry is now almost half the size of South Africa’s economy, which the Reserve Bank valued at R7.35 trillion in annualised market prices at the end of the third quarter of 2024,” Mulder said.
Investor Hesitation and Diversification Trends
Despite the positive growth, South African investors showed reluctance to commit to CIS portfolios, particularly in equity funds. South African Equity General portfolios experienced net outflows of R11.95 billion, while interest-bearing portfolios attracted R42.31 billion in net inflows.
Mulder noted that South African investors tend to favor diversification, with nearly half (49.9%) of all CIS assets held in Multi Asset portfolios, 30.5% in Interest Bearing portfolios, and only 18.3% in Equity portfolios. This contrasts with global trends, where 48% of international CIS assets are allocated to equity portfolios.
Offshore Investment and Hedge Funds
Offshore investment remains a popular choice for South African investors, with locally registered foreign portfolios managing R975 billion in assets by the end of 2024—a 14.1% increase from 2023. However, these portfolios also saw net outflows of R5.46 billion.
Meanwhile, the South African hedge fund industry had a record-breaking year, achieving double-digit net inflows for the first time. Assets under management grew by 34% to R185.12 billion, with retail investors contributing the bulk of the R13.31 billion in net inflows.
Hayden Reinders, convenor of the Asisa Hedge Funds Standing Committee, attributed this growth to strong performance, enhanced accessibility, and effective marketing. “We are celebrating 10 years of hedge funds as a regulated investment product in 2025. It is encouraging to see retail investors embracing hedge funds as valuable building blocks alongside unit trusts,” he said.
Looking Ahead to 2025
Mulder believes that 2024 may be seen as a turning point for South Africa, particularly for growth assets. Factors such as stable inflation, lower interest rates, the introduction of the two-pot retirement system, and improved electricity supply have contributed to renewed optimism.
However, Reinders cautioned that the hedge fund industry’s growth depends on clarity from the National Treasury regarding the tax treatment of collective investment schemes. “This tax review is crucial for the hedge fund industry and could enable the Financial Sector Conduct Authority to revisit regulations that currently limit investment options,” he explained.
The South African CIS industry’s growth to R3.87 trillion underscores its resilience and importance to the nation’s economy. While investor caution persists, the sector’s diversification trends and the rise of hedge funds highlight evolving opportunities for growth.
As South Africa navigates economic challenges and regulatory changes, the CIS industry remains a key player in shaping the country’s financial future. With continued innovation and investor education, the sector is well-positioned to build on its successes in 2025 and beyond.
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