Billions pour into Old Mutual as investors seek flexibility and yield

Source: Supplied.

Recent statistics from the Association for Savings and Investment South Africa (Asisa) highlight Old Mutual’s success in the competitive money market fund category.

In the quarter ending 30 September 2024, Old Mutual attracted over R8.1bn in money market fund inflows, despite the overall market remaining flat. Year-to-date, its money market funds grew by R9.8bn, outpacing total industry growth of R8.9bn. Over the past 12 months, Old Mutual achieved R12.6bn in growth compared to the industry’s R6.5bn.

“Since we started focusing on our cash and liquidity unit-trust offering, we have been responsible for more than 100% of the industry growth recorded by Asisa in the money market fund category,” says Sean Segar, joint head of Old Mutual Cash and Liquidity.

Commenting on the domestic fixed-income space, Segar noted that Old Mutual boasts a 25-year track record of managing money market funds under the South African Collective Investment Schemes (CIS) umbrella. Its flagship Money Market Fund, launched in August 1998, has grown its assets under management (AUM) to R26bn. The Institutional Money Market Fund also has a solid record, backed by investments in big five banks and RSA treasury bills.

Flexible money market solutions

The growing role of money markets in the fixed-income universe prompted the launch of the Cash and Liquidity Solutions unit in September 2023. This unit caters to the liquidity needs of institutional and corporate investors, offering solutions built around its money market funds. These solutions typically follow conservative, capital-preservation-focused investment mandates.

All money market funds offered by the Cash and Liquidity Solutions unit provide fixed-deposit-type yields but with same-day access, giving investors the flexibility to manage short-term funds without lock-in periods or early termination penalties.

“The current yields on many money market funds exceed those on a 15-month fixed deposit, with the added benefit of being highly regulated, independently rated, and with same-day liquidity via online portals,” Segar explains.

Clients also benefit from a single-entry point to build a diversified basket of high-quality paper issued predominantly by banks and the RSA treasury. According to Segar, large institutional clients often use multiple money market funds to diversify their portfolios, both from an investment and operational risk perspective.

“Old Mutual Cash and Liquidity Solutions is a substantial player in the money market fund space, providing attractive alternatives to bank call accounts and fixed deposits, but with diversification and full liquidity,” Segar concludes. “Our money market fund proposition remains compelling, offering clients fixed-deposit-type yields with call-account-type access. All our funds are managed by experts, with the benefits of scale passed on to our clients.”