ETFs have been very quickly establishing themselves as the preferred investment vehicle for government bond investors over the past few months, an analysis of Morningstar fund flows data shows.
Fund manager sentiment towards US equities had been negative for much of this year, with most asset management companies expecting a negative return over the next 12 months. But their outlook has brightened in October. Fund selectors have also started to be more constructive about the asset class.
About $105bn flowed out of Asia-domiciled mixed asset products in Q3, and total net flows from retail investors were down by more than half, according to data from Strategic Insight.
Outflows from emerging market equity funds slowed down considerably in September, according to Morningstar fund flows data. Moreover, the International Institute of Finance (IIF) estimates net flows will be positive in October. These would be the first net inflows into emerging markets since November last year.
For the first time in two years, European equities again are the most popular asset class with European investors. They took over the number one spot on the inflows list from multi-asset funds in September.
Risk-on sentiment has returned for the first time in ten weeks according to fund flow data from Bank of America Merrill Lynch.
The pace of inflows into index-trackers shows no sign of abating. With still three months to go this year, ETFs listed in Europe have already surpassed the previous inflows record set in 2014.
Emerging markets are set for their first annual capital outflows since 1988, according to a report published by the Institute of International Finance (IIF) on 1 October.
Saudi Arabia has reportedly withdrawn tens of billions of dollars from global asset management firms in response to the ongoing slump in oil price and the recent volatility in world equity markets.
August saw the greatest monthly outflows from emerging markets of all times. Asia, the origin of last month’s global market correction, was particularly hard hit.
Amid a violent market correction reminiscent of the 2008 global meltdown and unusually heightened volatility, European investors have chosen to play it safe. Money-market funds were their preferred choice in August.
The Great Rotation from emerging markets to developed market equities is now in full swing: while investors pulled out a record €7.1bn from global emerging market equities in July, net inflows into their developed market equivalents were at their highest since February 2014.
