With general equity funds returning an average 16,2% for five years to December 31, while the average five-year return for money market funds was 8,8% a year, said Asisa deputy CEO Peter Dempsey.

Domestic equity funds attracted R10,8bn of net inflows last year, while in 2006, 2007 and 2008 they recorded net outflows, with money market funds, asset allocation and fixed interest funds the firm favourites.

The collective investment industry had R750bn assets under management on December 31.

“Yes, we have seen spectacular volatility in the local stock market over the past five years, but the general trend has been up ... the JSE all share index has grown by 119% over five years, an annualised return of 17% to the end of December,” he said.

The industry attracted record net inflows of R96bn last year, attracted by domestic asset allocation funds, followed by money market funds, fixed interest funds and then domestic equity funds. In 2008, 82% of inflows went to money market funds, but last year inflows were more balanced.

Digging deeper into where local investors had put R47bn of fixed interest funds, Sanlam Investment Management retail unit trust head Candice Paine said about 50% of it went into money market funds, while the other half went to fixed interest varied specialist funds, a mix of funds from synthetic cash, and dividend income funds, through to funds that take views on duration in the bond market and hence the economy.

Tax-efficient dividend income funds had attracted an “inordinate amount of money” over the past couple of years, and based on last year’s flows, the trend had not yet abated. “But it also seems the good old-fashioned balanced fund is back. After many years of investors doing their own asset allocation, it seems the trend is again to leave it to the professionals.”

Investec Asset Management director Jeremy Gardiner said the light flows into equity funds in the final quarter of last year, with the bulk of unit trust investments going into asset allocation and fixed income funds, highlighted the fact that investors remained concerned that the market recovery since March was overdone.

“Although markets have seen a slight retracement, we believe the correction will be short-lived given the amount of money sitting on the sidelines waiting for an opportunity to invest ... given the fact that global economic health remains fragile and interest rates are likely to stay lower for longer, returns for 2010 will be harder to generate,” said Gardiner.