DOWNLOAD CALASTONE'S LATEST GLOBAL REPORT: FUND FLOWS - FIGHTING THE BEAR
How did investors around the world react to the bear market of 2022? Find out in our latest report on global fund flows, analysing data from across our network.
Overview
Global funds industry – fighting the bear
- 2022’s bear market delivered the biggest fall in AUM since GFC – down 21% from 2021’s record to $56.2 trillion
- The $14.7 trillion decline was the largest ever in value terms, but the percentage fall was bigger in 2008
- Exchange rates impacted the translated value of non-dollar assets
- Adjusting for FX, US assets were hit harder owing to greater sensitivity of overvalued US equities to rising bond yields, especially in the technology sector
- A greater allocation to equities overall was also a factor in the US
- Asia Pacific ex Japan’s investors increased their share of the global mutual fund pie in 2022
Trading volumes – buy, try, fly, repeat
- Turnover is high when markets are volatile – 2022’s volumes were lower than 2021 but remained well above pre-pandemic levels
- The bear market drove buyers away rather than provoking mass selling
- Trading intensity is typically similar between equities and fixed income, but equity volumes fell more in 2022
Focus on equities – flight to safety
- A year of outflows is rare owing to structural bias towards adding to savings
- Equity funds saw significant outflows in 2022 – $13.3bn, equivalent to one quarter of 2021 inflows
- Outflows were driven by a buyers’ strike rather than higher selling – investors stayed put in cash
- Investors were most pessimistic in Europe and the UK but were more optimistic in Asia-Pacific and Australia
- UK investor negativity was tempered by enthusiasm for ESG funds
Equity sector trends – risk off
- Smaller companies were crushed by rising risk aversion
- Tech crunch drove outflows
- China Funds – Zero Covid, zero fund flows
- ESG – a bright spot in a gloomy sky
- Income funds – defensive position drove inflows
- Active v Index – a tight race
Focus on fixed income – no refuge
- Bonds have not provided shelter from volatile equity markets
- Buyers jumped back into the market in November – taking advantage of higher yields
Focus on mixed assets & property
- Mixed assets are better anchored in regular savings plans, protecting them from outflows
- Property is vulnerable to an economic slowdown
Viewpoint – by Julien Hammerson, CEO of Calastone
- Volatility continues to characterise asset markets in 2023
- In weaker markets, a focus on cost is even more critical for fund managers and investors
- A revolution in fund management infrastructure is under way, delivering significant cost savings
- Calastone’s mission is to take cost and friction out of funds– delivering it straight to the industry’s bottom line