The Boston Consulting Group reports that South African Investors Are Turning to Emerging Trends to Make Money

The Boston Consulting Group reports that South African Investors Are Turning to Emerging Trends to Make Money

According to a new analysis by Boston Consulting Group, the asset management sector kept up its remarkable growth trajectory in 2021. Results indicated that South African investors are tilting toward investing in emerging trends other than other investment areas. According to the report, the worldwide Assets under Management (AuM) increased by 12% to $112 trillion, exceeding the 20-year growth average of 7% (BCG).

The 20th edition of BCG’s yearly industry study, titled Global Asset Management 2022: From Tailwinds to Turbulence, shows that the forces influencing the asset management sector are changing, opening up new opportunities and the possibility of disruption.

At 4.4% of the total AuM, net flow rates reached records. The Middle East and Africa (MEA) also experienced record growth rates, where AuM increased by 14% to $1.5 trillion. South Africa, on the other hand, underperformed with a 5 percent growth to $190 billion, below the 10-year average.

According to Arjan-Tim Ferweda, partner at Boston Consulting Group, Johannesburg, the excellent market run has powered the performance of the asset management business over the previous 15+ years. However, this has also come as a double-edged sword.

emerging trends
Arjan-Tim Ferweda

“While it has given the industry substantial tailwinds, it has also allowed older products that profit from the compounding of returns on underlying assets to dominate the market. However, there are indications these tendencies are starting to change, and the resulting instability is both a chance and a challenge for actors in the business,” said Ferweda.

Portfolios are increasingly being moved into alternative assets in search of returns that are higher than those offered by publicly listed markets.

With the expansion of the retail investor landscape, this trend is becoming more evident in South Africa and the larger MEA area. As a result, retail AuM growth surpassed institutional AuM growth in 2020–21, despite institutional clients continuing to be the largest client segment following global investment markets, accounting for 59% of all South African AuM.

This continues an expanding global and regional trend in which small-scale investors have risen to the top of the list of money sources.

Startups rely on large retail to expand their reach, increase brand awareness, and generate the high sales conversion rates that come with being placed in hundreds or thousands of stores. Retail startups continue to forge their paths as established retailers navigate the difficulties presented by rising e-commerce sales and supply chain disruption.

Many retail businesses have the advantage of navigating the new retail landscape from the outset by utilizing technology to engage with customers. As a result, investors are also paying attention.