Actuarial news and views from Cape Town and beyond

50 years of Unit Trusts in SA

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The first unit trust in South Africa, the South Africa Growth Equity Fund (SAGE), was introduced 50 years ago in June by Donald Gordon and Louis Shill. Since then the South African unit trust industry has grown to over 47 unit trust management companies with over 1 171 funds by this year.

Life insurance products dominated SA before unit trusts were introduced. Upon visiting the US in the 1960’s, Gordon and Shill saw an opportunity to grow the South African economy by pooling individual capital and transforming the life insurance industry. Their aim was to create equity-linked policies by linking life insurance policies to unit trusts in order to provide a hedge against inflation.

The popularity of unit trusts grew through financial journalism and led to the development of asset management and the role of the portfolio manager, with the asset management industry taking off in the 1990’s. Innovation resulted in the introduction of unit-linked retirement and living annuity products, as well as linked investment products and eventually unit trusts became a mainstream investment vehicle.

Unit trusts are regarded as one of the most positive examples of financial innovation, creating access to a transparent, convenient savings vehicle managed by investment experts for the ordinary investor.

This article by Finweek provides a brief history of unit trusts in South Africa and its outlook going forward.


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