Fund investors in Asia have been selling exposure in equities in favor of fixed income, according to a report by Calastone, due to souring market conditions and weak risk appetite.
Investors in Asia are shifting away from equity funds in favor of fixed income funds for their «perceived safe haven» status, according to a report by global funds network Calastone based on flow data.
After recording a net outflow of $63 million in April, investors continued selling equity funds which resulted in further net outflows of $222 million in May and $174 million in June. In contrast, Asia recorded net inflows of $1.6 billion for fixed income funds in the first half ($6.7 billion grow inflows), compared to $2 billion in net outflows during the same period last year.
Mixed Assets
With regards to mixed asset funds, Calastone noted that demand remained positive in the first half of 2023, though «buying did reduce significantly as the year progressed».
«The results highlighted in our latest fund flow data is, perhaps, unsurprising given the current macroeconomic backdrop. Fixed income and money market funds have not had such attractive yields since before the global financial crisis. At the same time, equity markets across Asia have been underperforming,» explained Justin Christopher, head of Asia at Calastone.
«With lingering fears of further economic downturn and expectations that interest rates could remain higher for longer, we expect investors to maintain cautious positioning within their portfolios until the general outlook for growth and global monetary policy is materially clearer.»
