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Institutional investment flows $120 billion in the red

Thursday, September 15, 2016
Opalesque Industry Update - The institutional investment industry saw asset outflows of $120 billion in the second quarter of the year, following $75.1 billion pulled from the industry in the first quarter of the year, according to eVestment Traditional Asset Flows Report covering 2Q 2016. Outflows were widely distributed across investor types and geographies.

While still only a fraction of the trillions institutional investors control, this multi-billion-dollar outflow from traditional strategies and products in the first half of this year could be a sign investors are increasingly looking at alternative investment options or holding onto cash.

The impact of the June Brexit vote may still not be fully showing itself as UK fixed income strategies reported inflows of $4.9 billion, while UK stocks reported outflows of $6.2 billion. Europe ex-UK equity products reported outflows of $16.8 billion and Europe ex-UK fixed income reported outflows of $17.5 billion.

Some other interesting points from the report include:

· ESG-focused strategies, which continue to get a lot of search activity on eVestment and significant media attention, saw 2Q 2016 inflows of $1.8 billion

· US core and core plus fixed income reported large inflows from investors following a year of net outflows. The eVestment US Core Fixed Income universe reported inflows of $9.9billion. The eVestment US Core Plus Fixed Income universe reported inflows of $4.2 billion

· While many major countries and regions of the world saw outflows, investors domiciled in Canada, Japan and Latin America saw inflows ranging from $14.4 billion (Japan) to $1.7 billion (Latin America)

· Corporate accounts had net out flows of $18.8 billion in the second quarter following out flows of $11.7 billion in 1Q 2016

· Foundations and endowments were net sellers in 2Q 2016 with outflows of $11.1 billion. Foundations and endowments were net sellers of US bonds and equities, resulting in net outflows in 2Q2 016 of $5.2 billion from US equities and $3.2 billion from US bonds

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