Fri, Sep 19, 2014
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. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  4. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali

  5. Short Selling - Notorious U.S. short-seller targets Alibaba[more]

    From Wantchinatimes.com: A notorious American short-seller appears to have "targeted" Chinese internet giant Alibaba on the eve of its historic public listing on the New York Stock Exchange, reports Chinese web portal Hexun. Alibaba's highly-anticipated listing on Friday could potentially be the big