Global Equity Flows Outpace Fixed Income First Time Since Crisis

Year-to-date cash contributions through April to equity and hybrid funds have surpassed inflows to fixed income funds for the first time since the financial crisis, Strategic Insight said.

“The net cash flow data—equity funds gathered $110 billion through April, mixed funds $30 billion and bond funds $100 billion—confirms a slowly shifting trend from global and other fixed income themes to selected equity categories, demonstrating investors’ desire for higher equity allocations to meet their long-term financial objectives,” said Daniel Enskat, head of global consulting for Strategic Insight.

Investors continue to favor emerging markets, Enskat added, particularly Brazil. In the first quarter, Brazil-focused mutual funds captured $20 billion in flows—“a remarkable 10% of worldwide cash contributions,” Enskat said.

While Brazil is a standout leader in the international category, investment advisors might want to consider launching cross-border Latin American funds or UCITS, “especially in smaller countries such as Chile, Peru and Columbia,” he added.

Further, investment companies in these nations have become more amenable to joint ventures. “Large distributors in Brazil and Mexico are showing a greater willingness to work with third-party fund managers of late,” Enskat said. “Many international fund companies such as Investec, BlackRock and MFS are building up their regional presence, and firms like Franklin Templeton already have an established business south of the border.”