Sun, Jan 22, 2017
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. Investing - This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally, Hedge fund legend David Einhorn is making a big bet on GM, After impressive 85% return in 2016, hedge fund looks to Canadian gold producer, small banks[more]

    This hedge fund made 37% betting on banks in 2016 and remains bullish after the Trump rally From Forbes.com: Can bank stocks continue to rise after a 28% surge in the KBW Bank Index in 2016, fueled by a post-election rally as stock pickers returned to the beaten down sector? Forget the s

  2. SWFs - China sovereign wealth fund CIC plans more U.S. investments[more]

    From Reuters.com: China Investment Corporation (CIC), the country's sovereign wealth fund, is looking to raise alternative investments in the United States due to low returns in public markets, its chairman said on Monday. CIC will boost its investments in private equity and hedge funds as wel

  3. Some hedge funds strong start in 2017 nice contrast to 2016[more]

    With the 2016 HSBC Hedge Weekly performance rankings in the books - a year in which the same leader-board entries pretty much dominated unchallenged throughout the year - comes a new leader board that is a hard-scrabble mix of hedge fund styles and categories. What is clear after but a few short wee

  4. Macro hedge funds and CTAs outperform in December on strong dollar[more]

    Komfie Manalo, Opalesque Asia: The last month of 2016 saw risk assets climbing higher, as part of expectations that the new U.S. administration will remove barriers to growth and investment, Lyxor Asset Management said. December also saw the Fed hik

  5. Opalesque Exclusive: Roxbury credit events UCITS gathers more assets[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The Roxbury Credit Events Fund, launched in September 2015, was up 4.24% in 2016, having returned seven positive months during the year. The managers raised