Global equity and bond inflows fall sharply but money market funds score
While Collective Investments’ global equity net flows fell from $103 billion to $31 billion in the third quarter of last year money market inflows more than doubled to $282 billion ($138 billion).
Equity inflows in Asia and the America’s fell sharply – Asia was down to $48 billion as against $68 billion in the second quarter and the America’s fell from $42 billion to $14 billion. Europe had a net equity outflow of $31 billion ($6 billion outflow).
Association of Collective Investments chief executive Di Turpin says the International Investment Funds Association figures cover the period before the full impact of the sub-prime crisis and market volatility.
“Europe which has 34 percent of global assets took the brunt of the selling – there were outflows in bond, equity and money market funds totaling more than $84 billion. The US funds had net inflows of $357 billion and remain the dominant industry force with 51% of global assets.
“The sub-prime debacle has had far less impact on the South African industry and investors here due to our relatively low level of equity investment and penchant for prudential type funds with moderate equity content.
“Overall investors need to focus on longer term equity market prospects rather than trying to time this market. Earnings multiples remain low with value emerging.”
Net cash flow to all funds was $319 billion in the third quarter falling below $400 billion for the first time since the third quarter of 2006. Inflows to long term funds were down nearly 90 percent to $37 billion from $294 billion in the second quarter mainly due to bond funds which had a $51 billion outflow in the third quarter (net inflow of $98 billion in the second quarter).
European bond funds had net outflows of $63 billion (net inflow $15 billion) with the America’s inflow at $14 billion was well down from the second quarter’s $65 billion.
The $282 billion flow into money market funds was due to the United States where inflows jumped to $312 billion in the third quarter from $100 billion in the second. The remaining countries had outflows with European funds recording net outflows of $27 billion as against the second quarter’s $35 billion inflow.
In spite of the lower investment in equities and bonds – Collective Investment assets world-wide rose by just over 6 percent to $25,82 trillion at the end of the third quarter. Asset growth was 4,5% if China (which has been included in the global figures for the first time) is excluded. Asset growth was also helped by the weaker dollar – European assets in dollar terms rose by 2,9 percent compared to a 1,9 percent decline in Euro’s.
Equities represent the majority of world wide collective investments assets – totaling 49 percent at the end of the third quarter with 16 percent in bonds and 18 percent in money market funds. Balanced and mixed funds were 10 percent. There were 64 062 funds world-wide at the end of the third quarter.
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