In 2025, South African equities improved by an average of 37% in rand terms. Bonds returned 21%. Rand appreciated by 12 per cent versus the dollar. Gold surged more than 50%. Morningstar analysts Michael Dodd and Sean Neethling referred to the local market as a hidden gem when it had given a 42% return in US dollar terms.
In virtually every respect, 2025 was a good year in the history of South African investors. And now that money a big part of it, is retail investors coming in during the run, now has to decide what to do next.
Kyle Hulett, who is the head of investments at Sygnia Asset Management, called 2025 an amazing year in terms of returns and then he immediately gave a warning that the market is now definitely back to volatility. The markets will become even more shaky than they are currently.
Retail Money Is Now the Majority — For the First Time
ASISA (Association for Savings and Investment South Africa) released numbers that didn’t get nearly enough attention outside of industry circles.
Retail hedge funds hit 56.6% of total industry AUM by December 2025 — the first time retail has overtaken institutional (qualified investor) funds in South African hedge fund history.
| End of 2015 | End of 2024 | End of 2025 | |
|---|---|---|---|
| Total hedge fund AUM | R64 billion | R185 billion | R216 billion |
| Retail share of AUM | Minority | 42% | 56.6% |
| YoY growth | — | — | +17% |
Hayden Reinders from the ASISA Hedge Funds Standing Committee confirmed during a media briefing that retail portfolios are “increasingly distributed through advisers, brokers, and investment platforms and are becoming accessible to a broader range of investors.” In 2025 alone, retail investors directed R7.5 billion in net inflows to Multi-Strategy portfolios.
The broader collective investment scheme industry is even bigger. ASISA reported R4.16 trillion in CIS assets by June 2025, with 1,899 local portfolios available to South African investors. That’s not a niche market anymore — that’s mainstream participation at serious scale.
As the behavior of investors changes, south african trading brokers are being forced to adapt just as quickly. But this shift is about more than technology because it reflects a bigger change in how people think about money, independence, and long-term security. Retail investing in South Africa has evolved from a pandemic-era curiosity into part of a broader lifestyle conversation about empowerment, stability, and financial well-being.
Why 2026 Won’t Look Like 2025
Several tailwinds that powered last year’s returns aren’t guaranteed to repeat.
It might be the end of the dollar tailwind. US dollar declined by 10% to 11% since its peak in 2025, the poorest year in a decade according to Morningstar. Such shift in currency gave the SA investor with offshoring assets significant returns. To repeat it, the dollar would have to continue to fall, and most 2026 predictions do not favor it.
The phenomenal performance of Gold is under threat. The increase of gold more than 50% was caused by central bank purchases, geopolitical tension, and inflation hedging. Whether this is true or not depends on the direction of interest rates, politics of geopolitics and whether central banks continue to accumulate at the same rate. They employed South African gold and platinum miners to ride this on the JSE – should the commodity become soft, then the positions feel the impact of this directly.
The AI bubble is receiving coverage. The head of research at Foord, Ishreth Hassen, cautioned that the IT industry is at an all-time high. The cycle of funding in which advertising revenue by tech companies finances spending on AI infrastructure is not limitless. It is a real concentration risk to SA investors who put their funds in offshore technology.
Home-wise, things are getting better – very gradually. By November 2025, inflation decreased to 3.5% (Reuters). The cut in rates is favoring the mood of households. Household consumption expenditure is projected by Investec economist Lara Hodes to increase by 2.1% in 2026. But Sygnia is experiencing an L-shape recovery – not deteriorating, but not improving very quickly either. Hulett cited poor productivity in South Africa, a history of fiscal slippage, and last position in the world on AI preparedness as causes of concern.
FSCA Is Tightening the Rules on Brokers
For retail investors trading through online platforms, the regulatory picture is changing fast. The Financial Sector Conduct Authority has been stepping up enforcement, and what’s coming in 2026-2028 will reshape how brokers operate in South Africa.
What does FSCA actually require from brokers?
- Fund segregation — client money must be held in top-tier bank accounts, completely separate from the broker’s operational funds
- Disclosure obligations — costs, risks, and product nature must be communicated clearly before the investor commits money
- Local dispute resolution — retail investors have a defined complaints path within South African legal jurisdiction, something offshore unregulated brokers can’t provide
- Active licensing — brokers must hold a current FSP (Financial Service Provider) number, verifiable on the FSCA’s public database at fsca.co.za
How to verify your broker’s FSCA status
This takes about two minutes and most people skip it entirely.
- Ask the broker for their FSP number
- Go to the FSCA website (fsca.co.za) and search their database
- Confirm the license is active, not suspended, withdrawn, or lapsed
- Check that the license covers the services being offered — a license for financial advice doesn’t automatically cover derivatives trading
- Compare the contact details on the FSCA listing with the broker’s website — mismatches can indicate a fraudulent entity impersonating a regulated firm
Real example worth knowing: DayTrading.com flagged during their February 2026 broker review that IG — a well-known, publicly listed brokerage on the UK FTSE — had its FSCA license status change from authorized to withdrawn. If a broker that established can have a status change, smaller platforms deserve even more scrutiny.
What’s coming from FSCA in 2026-2028
- The COFI Bill (Conduct of Financial Institutions) will consolidate and reshape conduct regulation across the entire financial sector once passed
- AI in financial services — the FSCA and Prudential Authority are conducting a market study on AI adoption in the sector
- Crypto brought under formal regulation — the FSCA now publishes an approved list of licensed crypto asset service providers
- New conduct standards for third-party service providers, outsourcing, and culture/governance are being developed for public consultation
- Commissioner Unathi Kamlana reappointed for a second five-year term effective June 2026
The FSCA held its 3rd Annual Industry Conference on March 18-19, 2026, themed “Reimagining Financial Market and Conduct Regulation for a Changing World.” The regulatory bar is rising, and brokers operating with thin compliance or relying purely on offshore licensing will find it harder to serve SA clients going forward.
How Expert Portfolios Are Positioned for 2026
Different asset managers are reading the current environment differently, but the common thread is selectivity over momentum.
| Manager | SA Equity Exposure | Focus Areas | Key Concern |
|---|---|---|---|
| Foord | 60%+ (increased) | Healthcare, consumer staples, retail banking | SA companies unfairly discounted despite stable earnings |
| Sygnia | Selective | SA bonds moved to neutral, favoring EM bonds | “L-shaped recovery” — things stable but not accelerating |
| Morningstar | Recommends rebalancing | Undervalued US small-cap and value shares over mega-cap tech | US tech at record valuations, concentration risk |
Nick Balkin, Foord’s chief investment officer, made a point that’s worth sitting with: the “ratings gap” applied to South African-focused companies is unwarranted, with many businesses trading at sizeable discounts despite stable earnings. Translation — some SA stocks are cheaper than they should be because the market hasn’t fully priced in the improving local conditions.
If You’re a Retail Investor Entering or Continuing in 2026
- 2025 was exceptional, not normal. Presenting 37% equity returns per annum will result in disappointment or too much risk. All of the big asset managers are sending strong signals that 2026 will require discipline and selectivity over being more aggressive.
- Check your broker, and see what you are depositing. The lowest standard is an FSCA-regulated and current FSP number. Test the FSCA database, but not the one offered by the broker themselves, where they claim to be regulated.
- You are more free than ever, and that is two sides of a coin. Almost 1,900 CIS portfolios, ETFs, tax-free savings accounts, direct access to hedge funds, direct share ownership. More choices imply more fee arrangements to consider, more risk policies to grasp, and more opportunity to find yourself in a product that is not–really–suited to your circumstance.
- Local opportunities should not be neglected. It is typical to have the instinct to go fully offshore when the rand has a good year. But claiming 60%+ SA equity allocation, Foord is deliberately betting that domestic firms are under-priced. The solution of rejecting JSE altogether could lead to the resolution of that “ratings gap” Balkin warned about.
The regulative climate is not an administrative nuisance, but your friend. FSCA safeguards are present since historically retail investors were the most susceptible to deceptive products, undisclosed charges, and actual fraud. It is really good news that the regulator is becoming increasingly strict in 2026 when it comes to people who may have their own money at stake.
FAQ
Local equities returned approximately 37% in rand terms. Bonds gained 21%. The rand strengthened 12% against the US dollar. Gold rose more than 50%. In US dollar terms, Morningstar recorded a 42% return for the South African market overall, which they described as a “hidden gem” performance.
The FSCA (Financial Sector Conduct Authority) is South Africa’s market conduct regulator. Brokers with an active FSCA license must segregate client funds from company money, provide clear risk and cost disclosure, and offer a local complaints resolution process. You can verify any broker’s status by searching their FSP number on the FSCA database at fsca.co.za.
Yes. Since hedge funds were brought under the CISCA framework in 2015, retail access has expanded steadily. By end of 2025, retail hedge funds held 56.6% of the total R216 billion in hedge fund assets — the first time retail overtook institutional investors in this category. These portfolios are distributed through advisers, brokers, and investment platforms.
The COFI Bill will reshape conduct regulation once passed. The FSCA is developing new standards for AI in financial services, crypto asset providers (an approved list is already published), third-party outsourcing, and governance. Commissioner Unathi Kamlana has been reappointed for a second five-year term. The overall direction is stricter oversight and higher compliance standards for all financial service providers operating in South Africa.
Expert opinions are mixed. Sygnia favors emerging market bonds over SA bonds. Morningstar recommends shifting from overvalued US mega-cap tech toward US small-cap and value shares. Foord is going the other direction with 60%+ SA equity exposure, arguing local companies are undervalued. Most experts recommend diversification across both local and offshore holdings rather than going all-in on either side.
References
- “2026 brings fewer tailwinds and tougher choices for SA investors” — Daily Maverick, January 6, 2026 – https://www.dailymaverick.co.za/article/2026-01-06-2026-brings-fewer-tailwinds-and-tougher-choices-for-sa-investors/
- “Retail hedge funds overtake qualified investor funds as industry hits R216bn” — Moonstone Information Refinery, 2026 – https://www.moonstone.co.za/retail-hedge-funds-overtake-qualified-investor-funds-as-industry-hits-r216bn/
- “What The FSCA Means For Retail Investors In South Africa” — The Gremlin, March 17, 2026 – https://www.thegremlin.co.za/2026/03/17/what-the-fsca-means-for-retail-investors-in-south-africa/
- “Best FSCA-Regulated Brokers In 2026” — DayTrading.com, January 2026 – https://www.daytrading.com/brokers/regulated/fsca
- “FSCA publishes 2025-2028 Regulation Plan to guide financial sector reform” — Moonstone Information Refinery – https://www.moonstone.co.za/fsca-publishes-2025-2028-regulation-plan-to-guide-financial-sector-reform/
- “Retail sector tipped for gradual recovery in 2026” — Supermarket & Retailer, February 19, 2026 – https://supermarket.co.za/index.php/economic-factors/7731-retail-sector-tipped-for-gradual-recovery-in-2026-after-muted-festive-season
- Financial Sector Conduct Authority — https://www.fsca.co.za/
- “Navigating South Africa’s Financial Markets: Why FSCA Regulation is the Ultimate Safety Net” — Disrupt Africa, March 24, 2026 – https://disruptafrica.com/2026/03/24/navigating-south-africas-financial-markets-why-fsca-regulation-is-the-ultimate-safety-net/
