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The South African Interest-bearing (“SAIB”) fund market amounted to ZAR793.5 bln (c. USD52 bln) at September 30th 2020, making it by far the largest on the African continent. Reflecting the relative safety and stability of the fund type, alongside the uncertain economic environment, interest bearing funds have been a significant outperformer versus the other domestic fund types in South Africa.
The funds tend to be dominated by the top 5 banks in South Africa, which represents a concentration risk in a bank-led financial crisis. Positively, the South African Banking system is considered to be sound, despite the recent pressures. The short-term funds can hold greater levels of counterparty diversification, but the concentration with the banks remains vast. On the other hand, short-term funds clearly take on slightly higher risk.