Blockbuster funds dominate Asian asset accumulation

Strategic Insight, the New York-based research firm, says 29 funds from Asia-Pacific have made it this year into its annual 'billionaires fund club', which tracks those mutual funds that reach over $1 billion of flows.

Together, 14 bond funds enjoyed inflows of $29.1 billion and 10 equity funds raised $17.4 billion. Including balanced and 'other' funds, the 29 from the region saw a combined haul of $54.2 billion. (These are funds raised in Asia; the investments include both local and global exposures.)

Strategic Insight's data goes to end September, so there's still room for more to join the club; for example, SMBC Nikko's New World bond and equity funds raised over $2 billion in October, which isn't reflected in the consultancy's figures.

Volatility was high, however, with 10 funds from the region experiencing huge outflows to the tune of -$19.2 billion, of which most (8 funds, -$14.4 billion) came from fixed income.

Daniel Enskat, senior managing director at Strategic Insight, notes the bigger firms are winning the biggest slices of net inflows. To see consolidation in action, see the December edition of AsianInvestor magazine, which tracks those fund management companies receiving assets from clients based in Asia-Pacific.

The biggest winner from Asia this year has been, hands down, Nomura Asset Management. Its series of US high-yield bond funds with various currency tranches, including the popular Brazilian real, has raised a total of $9 billion (for details, see AsianInvestor magazine, July 2009). The first version raised $1.2 billion in January. JP Morgan Asset Management was sub-advised to manage a second version of the fund; launched in May, this proved to be the true blockbuster, raising $4.5 billion as of September.

Nomura also launched the top-selling global bond fund, the Nomura Pimco US High Yield fund, which topped $1 billion in September.

Although the Asia business is often driven by new product launches, there were quite a few existing funds that enjoyed strong sales in 2009. These include the Birla Sunlife Savings Fund ($4.2 billion), the HDFC Cash Management Fund ($2.8 billion) and the Diam World Reit ($2.2 billion).

The top new launches, aside from Nomura's high-yield triumph, have been exchange-traded funds, including the ChinaAMC CSI 300 Index Fund (which raised $4.1 billion) and the E Fund CSI 300 Index Fund ($2.5 billion). Overall Asia fund sales were surprisingly strong.

Globally, including Asia, 170 long-term funds made Strategic Insight's billionaires' fund club in 2009, gathering over $450 billion in net new money, while 60 funds suffered a combined $120 billion of net outflows.

The biggest swings have been in fixed income, with 85 bond funds reaching nearly $280 billion in cash contributions, with the majority in the United States.

The biggest gainers were Pimco's Total Return fund (over $40 billion of inflows so far this year), Carmignac Patrimoine ($12 billion) and Nomura's high-yield series ($9 billion).

In Asia, money flowed to high-yield bond funds and Asian equity funds, with sizeable flows also to real estate funds. It has exited global bond funds and balanced funds. In other words, Asian investors continue to chase yield.

This is very different to Europe, where the major product launches have been in guaranteed or protected funds, in European bonds, and in balanced products.

Strategic Insight calculates there is now close to $1.5 trillion invested in Asian bond funds and over $700 billion in Asian equity funds, sourced from investors globally. Net inflows were up in 2008 but it was the worst year in a long while, with total flows in 2009 nearly $30 billion, or triple what was achieved in 2008.

The research firm estimates 2010 should see net flows to Asia funds rise to $350 billion.