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Fixed-income, active equities saw outflows; passive equities, cash-management up as COVID-19 pandemic rolled out

Monday, June 01, 2020
Opalesque Industry Update - As the global COVID-19 pandemic picked up speed in Q1 and countries around the world went into various versions of lockdown, fixed-income and active equity strategies were among the hardest hit with investor redemptions, according to the just published eVestment Q1 2020 Institutional Investment Traditional Asset Flows Report. Among the beneficiaries of these outflows were passive equity and cash management strategies.

Long-only asset managers reporting to eVestment had Q1 2020 institutional assets under management (AUM) of $28.3 trillion at the end of last quarter. Net institutional flows totaled +$59.9 billion in the most recent quarter and -$117.7 billion over the last four quarters.

Fixed income strategies experienced dramatic institutional outflows in Q1 2020. U.S. bond managers saw redemptions of -$162.6 billion, of which -$111.3 billion came from active strategies and -$51.3 billion from passive strategies. Non-U.S. fixed income strategies also saw outflows: -$60.8 billion from active non-U.S. strategies and -$47.9 billion from passive non-U.S. strategies.

Cash management strategies, excluded from the figures mentioned above and from the charts in the report, were big winners in institutional investment flow, gaining +$332.0 billion during the quarter.

Active equity strategies experienced institutional outflows of -$80.9 billion in the first quarter of 2020, with -$51.0 billion coming out of active U.S. and -$29.9 billion from active non-U.S. managers. Passive equity strategies, on the other hand, saw extensive capital inflows during the quarter. Fresh allocations to passive equity strategies totaled +$110.6 billion in Q1 2020. Passive U.S. equity strategies saw institutional inflows of +$49.4 billion, while passive non-U.S. strategies saw inflows of +$61.2 billion.

Asset flows trends from some major regions around, according to the new eVestment report, included:

· U.K.-domiciled investors allocated +$2.2 billion to U.K. fixed income strategies and +$0.7 billion to U.K. equity strategies in Q1 2020; the U.K. fixed income segment actually registered outflows when excluding U.K. cash management strategies. Europe fixed income managers also saw inflows of +$1.6 billion from U.K. investors during the quarter.

· Europe ex-U.K.-domiciled investors redeemed a total of -$90.1 billion from long-only strategies in Q1 2020. U.S. and global fixed income managers bore the brunt of outflows during the quarter with redemptions measuring -$45.8 billion and -$24.1 billion, respectively.

· Asia ex-Japan-domiciled investors were net allocators to a number of strategies in Q1 2020, but those, notably, did not include managers investing in domestic markets. Asia-Pacific equity strategies saw outflows of -$0.5 billion from this group of investors. Asia-Pacific fixed income, similarly, saw outflows of -$0.6 billion. U.S. equity and fixed income managers saw the largest inflows from Asia ex-Japan investors, +$4.5 billion and +$3.2 billion, respectively, during the past quarter.

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