South African managers now see ETFs as a way to attract clients
A Prescient Fund Services survey found South African active managers no longer view ETFs as a threat to unit trusts; 88% expect active ETFs to grow meaningfully over five years.
Prescient Fund Services’ 2026 Prescient ETF Evolution Report, based on a survey of South African investment professionals, found that none of the respondents view actively managed ETFs as a risk to traditional unit trusts and that 88% expect active ETFs to grow meaningfully over the next five years.
The report, now in its second year, draws on responses from Prescient’s platform and specialists across its management company, capital markets and fund services teams.
Most survey participants described active ETFs as a way to attract new clients and widen market access rather than as direct competition to unit trusts. The report says the local market is expanding beyond passive index tracking into actively managed strategies, income and balanced funds, fixed income ETFs and global feeder solutions.
The report highlights that future ETF growth will depend on distribution channels and the operating infrastructure that supports new launches. It notes similar issues in the UK and European markets around launching active ETFs and building trading and distribution systems.
Craig Mockford, chief executive officer of Prescient Fund Services, said, ‘The response to our first Prescient ETF Evolution Report in 2025 demonstrated a genuine appetite for greater understanding of this rapidly developing market.’ He added that the 2026 edition focuses on practical opportunities, challenges and the infrastructure needed to support the next phase of ETF growth.
The report sets out operational and capital-markets considerations for issuers, including when a feeder fund structure is appropriate, the role of capital markets teams in supporting liquidity and pricing, and issues around seeding new strategies. It describes how institutional investors use ETFs as portfolio tools, for example allowing discretionary fund managers to implement model portfolios for multiple clients through a single wrapper and enabling pension funds to manage cash balances more efficiently.
The report also discusses growing retail participation and the challenges of reaching financial advisers and wealth managers through distribution channels. Prescient wrote that greater clarity on product structure, distribution and portfolio use will be needed to support longer-term value for investors and managers.
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