Tue, Jun 28, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Stock and Bond Fund Flows exceed $900 billion in 2010, mostly around risk aversion and income needs - Strategic Insight 2010 Review & 2011 Outlook

Wednesday, January 05, 2011

Daniel Enskat
Opalesque Industry Update - 2010 net flows to stock and bond funds amounted to over $900 billion worldwide, according to Strategic Insight’s 2010 Global Asset Management Review/2011 Outlook, mostly around risk aversion and income needs, and a business focus back-to-basics.

Among the best selling investment categories were Global, Emerging Market, Asia Pacific, ‘balanced’, and absolute return. “The top five 2011 focus areas for institutions and global distributors based on a proprietary Strategic Insight survey are investment solutions, absolute return, client service, thought leadership and better digital information delivery,” according to Daniel Enskat, Head of Global Consulting for Strategic Insight.

“Three quarters of all global net flows since the crisis benefited fixed income products, a complete reversal from 2005-2007, where equity funds accounted for three quarters of flows on aggregate globally,” says Enskat. “While the size and scope of bond flows going forward is a debate in the industry, we anticipate continued demand around flexible ‘safety & income’ solutions, alongside a cautious return to equity funds in 2011.”

Many of the forces that influenced investor behavior and choices in 2010 are likely to remain in place for at least part of 2011. Financial uncertainty, very low cash yields (in some developed capital markets), a secularly depreciating US Dollar, quantitative easing the sequel, the debt crisis in Europe, lackluster aggregate demand for funds across Asia, regulatory changes and uncertainties, convergence of multiple parts of the industry and investor compartmentalization between “safety & income” and “risk capital” in an overall context of risk aversion.

“From a flow perspective, three meta-trends – future asset class/investment category demand, regional flow potential (developed vs. emerging) and concentration of leadership via selected blockbuster products – will be part of the conceptual framework for fund managers as they are mapping out brand positioning and growth strategies for the coming years,” added Enskat.

While themes and simplicity currently dominate the product landscape, institutions and distributors around the world going forward expect a gradual shift towards “bridge” products, leading towards investment solutions and absolute return themes, albeit with geographical nuances.

The crisis also sharply delineated outcomes for fund managers. Companies that “wasted the crisis” by not doing enough to reach out to clients, that cut back on resource and geographic commitments, and that did not innovate and adapt, experienced very different outcomes compared to those who followed a more committed strategy.

The decision by distributors to reduce the number of managers and funds that they work with has led to a distinct “winner takes all” phenomenon over the past few years and the concentration of flows in the last two years to a few key managers and flagship funds around the world has been accelerating.

Explains Enskat: “Over $900 billion in net flows went to long-term funds worldwide in 2010. With around 60,000 long-term mutual funds worldwide, $800 billion in cash flows went to only 350 products – in other words, one half of one percent of products accounted for 94% of 2010 industry flows to long-term products –marking an acceleration of leadership turnover and concentration of success among fewer managers and products.”

“Products such as PIMCO Total Return, Templeton Global Bond, Carmignac Patrimoine, Pictet Local Emerging Market, or Schroders ISF Euro Corporate Bond reached blockbuster status as the above mentioned themes were implemented by distributors: back to basics, sexy but simple products, independent brands and thematic product appeal. At the same time, some distributors might seek to reverse such extreme concentration going forward, opening new relationship opportunities.”...Corporate website:Source
KM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s