European investors have been selling out of equities this year and have piled into credit instead. Net monthly inflows into corporate bond funds and ETFs reached an all-time record in April, according to Morningstar data.
A poll conducted by Expert Investor last year among more than 60 European fund selectors showed that active share is an important fund selection metric for more than 80% of them. However, very few fund houses regularly update investors about the active share of their funds. Should they be more open?
Short-term fund flows are known for their capricious nature. And recent months have shown that rule still holds. While flows into European equity funds were close to record highs in autumn last year, they have since edged deeply into negative territory.
As soon as a fund’s portfolio reaches 40 stocks, the benefits of portfolio diversification diminish. Therefore, fund managers should strive to have no more than 40 holdings. That’s the conclusion of a study conducted by Nomura Asset Management.
The extent to which a company adheres to ESG-criteria does not materially impact stock returns. However, changes in ESG scores can tell you something about future return potential of a stock, according to new research commissioned by NN Investment Partners.
The cheaper a fund is, the better the chance it outperforms its peer group, a study by Morningstar has shown.
Corporate bond funds are strongly back in fashion after a long streak of outflows, as investor confidence inched up in March and the ECB announced the inclusion of corporate bonds in its QE programme. Emerging market debt even witnessed the biggest net monthly inflows in more than two years, according to Morningstar’s latest fund flows…
Multi-asset funds lost money for the second consecutive month in February, for the first time since March 2009. Funds that invest mainly in bonds have been bleeding most of late, while medium-risk funds actually saw net inflows.
European investors did themselves a disservice in February. They sold out of pretty much all asset classes when markets hit (in some cases) multi-year lows before recovering their losses in the past couple of weeks. The outflows mainly hit active funds, as ETFs saw modest net inflows.
More assets will be invested in alternative investment funds than in fixed income globally by year-end if the current fund flows trend persists. Net flows into alternative funds saw double-digit growth for the second year in a row, according to a Morningstar report.
With returns from European equities distinctly harder to come by than during the QE inspired climb last year, active funds falling short in active share terms are going to find investors less forgiving.
Smart beta ETFs charge investors up to three times as much as plain-vanilla index trackers, according to newly published research by Morningstar. This disparity is not justified by the additional cost of constructing and calculating a ‘smart’ index, and is a severe drag on performance. Therefore, investors should think carefully before investing in a smart…
