DOWNLOAD CALASTONE'S LATEST GLOBAL REPORT: GLOBAL FUND FLOWS - BONDS LEAD THE WAY IN A SHIFTING WORLD
2024 marked a big turning point in global markets as central banks began the long-awaited process of cutting interest rates as inflation in most major economies finally came back under control.
Our latest annual review shows how investors have responded to this and the other big trends of 2024.
Overview
Fund Values
- Mutual funds globally jumped $9.4 trillion to a record $78.2 trillion in 2024, up 13.6% year-on-year
- Rebound reflects strong equity and strong bond markets as well as inflows
- Fund inflows accounted for approximately one third of the increase
Trading Volumes
- Volumes traded across Calastone’s global network surged 34% to $1.32 trillion, well above the previous record set in 2021
- Strong capital markets drove investor activity
- Equity volumes soared 39% - half of this was due to higher asset prices and half to greater trading activity
- Fixed income fund volumes jumped by a third (33%) – mainly due to greater activity
- Mixed asset fund trading rose by a quarter (23%) though the net picture was less positive
Net Fund Flows
- Net fund flows are the very small difference between very large volumes of trading – over the last five years, equity net fund inflows have been just 1.5% of total volume traded
- Across fixed income, equities and mixed assets net fund inflows jumped to $61.0bn in 2024 from $23.9bn in 2023
Focus on Fixed Income – Net flows
- Investors added a net $52.0bn to bond funds in 2024
- Inflows to bond funds rose in Asia, Europe, the UK and Australia and were at their highest on our six-year record in every territory
- Since 2019 investors have added more cash to bond funds that to all other asset classes combined
Focus on Equities – Net flows
- Soaring stock markets did not translate into dramatic fund inflows in 2024 in many parts of the world – they totalled just $3.5bn across our global network in 2024, though this is a marked improvement on 2022 and 2023
- Record trading volumes and small net inflows indicates lack of consensus as well as switching between fund sectors
- Global and North American funds were the big winners with $18.0bn and $9.0bn inflows respectively
- European funds saw first inflows in six years, but Asia-Pacific and UK funds continued to see significant outflows driven mainly by local investors in both cases
- UK-focused equities suffered the worst net outflows, shedding $13.3bn in 2024
Focus on Active v Index-tracking – Net flows
Equities
- Equity index trackers proved far more attractive to investors everywhere than active funds in 2024 – investors added $17.5bn to passive funds and withdrew $14.0bn from actives
- Most equity fund sectors saw investors favour trackers in 2024 but global and North American ones stood out – these active funds garnered far more inflows than index ones
Fixed Income
- Active fund managers are beating index funds for inflows in fixed income funds – 75% of 2024’s inflows were to actively managed bond funds; active funds have done better longer term too
- Asian and Australian investors are the key buyers of active bond funds
Focus on ESG – Net flows
- Outflows from ESG equity funds slowed in 2024, but this mainly reflects better sentiment to equity funds overall compared to 2023
- $2.9bn was withdrawn from ESG equity funds compared to $6.4bn added to non-ESG counterparts
Focus on Property – Net flows
- Real-estate funds continued to spiral downwards in 2024, shedding $615m in the sixth consecutive year of outflows
Focus on Mixed Assets– Net flows
- Mixed asset funds saw inflows fall to $5.6bn in 2024, their lowest level on our six-year record
- Mixed-asset funds have nevertheless seen more positive fund flows than equities for three consecutive years