Global fund assets drop despite rise in net cashflow

Investment fund assets worldwide saw a marginal quarter-on-quarter fall to September 30 last year, despite an increase in overall net cashflow in particular into long-term bond products, new figures show.

Fund assets dropped 0.6% to €17.36 trillion ($23.8 trillion) globally by the end of the third quarter, according to data from the European Fund and Asset Management Association (Efama) covering 45 countries.

Net cash inflow to all funds increased to €156 billion for the period, the highest total since the first quarter of 2008, compared with €14 billion in net outflows in the second quarter.

It was the sixth successive quarter that long-term funds have seen positive flow, increasing by €10 billion to €190 billion, with bond funds accounting for over two-thirds of that (€128 billion). The US saw an €82 billion inflow into bond funds, while Europe recorded €37 billion (double click on image, left).

Equity funds, on the other hand, recorded outflows of €16 billion in the third quarter – the first such outflow since the first quarter of 2009. The US was the dominant factor here, with an acceleration in outflow to $24 billion, from a $6 billion outflow in the previous three months.

Worldwide net flows into balanced/mixed funds was €28 billion in the third quarter, down from €35 billion in the previous period. Both Europe and the US saw slight decreases on the previous quarter.

Money market funds, meanwhile, continued to experience negative cash flows for the sixth consecutive quarter, albeit at a slower rate with outflows of €34 billion compared to €194 billion in the second quarter.

Reduced net outflows were attributable to money market funds in the US, where net outflows fell to €14 billion in the third quarter from €135 billion in the second quarter and €243 billion in the first.

Outflows from European money market funds stood at €16 billion in the third quarter, still substantially lower compared to a net outflow of €52 billion in the previous period.

At the end of the third quarter, 40% of worldwide investment funds were held in equity funds. The asset share of bond funds was 22%, for money market funds 19% and for balanced/mixed funds 11%, with 8% for unclassified/others.

The number of investment funds worldwide stood at 68,863 at the end of the third quarter. By type of fund, 40% were equity funds, 23% were balanced/mixed, 18% were bond funds and 5% were money market funds.

Looking at the worldwide distribution of fund assets, the US and Europe held the largest shares in the world market, at 47.5% and 30.9%, respectively. Brazil, Australia, Japan, Canada, and China follow in this ranking. Taking into account non-Ucits assets, the market share of Europe reached 37.5% and that of the US 43%.

The research report was compiled by Efama and the Investment Company Institute on behalf of the International Investment Funds Association.