Investors Pulling Out of SA Equities May Have Tried to Time the Market

In 2025, the local equity market delivered its best performance in many years, yet there were substantial outflows from unit trust funds invested solely in JSE companies, especially over the fourth quarter. This indicates that some investors may have anticipated the JSE’s strong bull run coming to an end.

This was revealed at a recent presentation by Sunette Mulder, Chief of Staff at the Association for Savings and Investment SA, on the state of the collective investment scheme (CIS) industry to December 2025. 

Last year was a bumper year for the JSE: the FTSE/JSE All-Share Total Return Index (Alsi) was up 42.4% over the 12 months, according to the Corion Report for December 2025. The Alsi’s sterling performance can be mainly explained by the commodity boom, which saw gold and platinum-group-metal prices hit new highs (the Resources 10 Index delivered an astonishing 144.2%). But other sectors also performed well: listed property was up 30.6%, financials up 27.2% and industrials up 19.2%.

Unit trust funds invested fully in the local equity market have a category all to themselves: the SA Equity SA General category. This category was instituted a few years ago to distinguish between 100% local equity funds and funds in the SA Equity General category that invest up to 45% of their portfolios offshore.

Mulder said the CIS industry, which comprises unit trust funds and exchange-traded funds, ended 2025 with assets under management of R4.58 trillion and near-record annual net inflows of R196 billion. 

Inflows and outflows are recorded separately from capital fluctuations caused by market movements. Inflows comprise new investor money flowing into funds and reinvested dividend and interest distributions. Outflows are what investors either withdraw as cash or move to other investments. Net inflows/outflows are the difference between money coming in and money going out.

Mulder says of the R196bn in net inflows in 2025 – the second highest in the industry’s 60-year history – roughly one third (R67bn) was attributable to new investment and two-thirds (R129bn) was reinvested dividends and interest.

The inflow/outflow figures are informative because, to a certain extent, they reflect how investors move their money in anticipation of (or in reaction to) market movements. These actions fly in the face of investment experts’ warnings against trying to time the markets.

Mulder says portfolios in the SA Equity SA General category recorded the highest net annual outflows of R16.5 billion. In the fourth quarter alone, these portfolios had net outflows of R15.9 billion. Portfolios in the SA Equity General category (at least 55% local equities), on the other hand, attracted strong net inflows of R12.5 billion in the last quarter of 2025, finishing the year with net annual inflows of R5.4 billion.

The biggest inflows were into SA Interest Bearing Short Term (R56.4bn), SA Multi Asset Income (R52.1bn) and SA Multi Asset High Equity (R34.7bn).

So why did investors move substantial amounts out of portfolios invested in the local equity market when the market was performing so well?

Mulder speculated that the reason might be that the strong run in the local market caused some investors or investment managers to lock in their gains. “If you look at what has happened subsequently this year, investors who moved out of local equities may feel a sense of relief in light of the current market turmoil,” she said. “But timing the market is a risky approach, and over the long term, a ‘time in the market’ strategy generally outperforms timing the markets,” adds Mulder.

Looking at overall allocations to the different fund categories, Mulder noted that, unlike overseas, where almost half of CIS assets are invested in equity portfolios, South African investors prefer the diversification offered by multi-asset portfolios. At the end of 2025, half of local CIS assets (50%) were held in local multi-asset portfolios, 29% in interest-bearing portfolios (bond funds and money-market funds), and only 20% in equity portfolios.