Flows into equity funds rose by 174% year-on-year according to Calastone after seeing inflows of $15 billion during 2021.
According to the latest Calastone Global Fund Flows report, this compared to $5.5 billion seen during 2020 and was eight times larger than the $1.9 billion equity flows seen in 2019.
It was also larger than the percentage change by global investors where overseas investors increased their equity investment by 164%.
The largest proportion of was seen during the third quarter, when affected areas of Australia came out of lockdown, when there was $6.3 billion in flows. This then dropped significantly to $3.3 billion in the fourth quarter as fears about the Omicron variant started ahead of the summer break.
“Almost two thirds of Australian equity fund purchases (A$9.6bn) took place in the second half of the year, as the vaccine programme encouraged hopes that the pandemic was coming to an end. The late start of the Australian vaccination drive meant that the surge in inflows in Australia took place a little later than in the UK, Europe and Asia, however, most of the buying was in the first half of the year.
“July was the most positive month of all in Australia, but net inflows dwindled with each successive month, falling from A$3.1bn in July to A$1.0bn in December as both rising inflation and the sudden appearance of the Omicron variant in November dampened investors’ spirits.”
Equity flows during 2021
|
Q1 |
$2,976 billion |
|
Q2 |
$2,391 billion |
|
Q3 |
$6,305 billion |
|
Q4 |
$3,348 billion |
|
2021 total |
$15,019 billion
|
Source: Calastone
Australian investors also saw a rise in the number who were selecting overseas equities rather than domestic ones, this rose by 186%. Two-thirds of purchases were to equity funds focused on overseas markets compared to just over half in 2020, mostly into global ones rather than sector or region-specific ones.
However, fixed income flows were subdued in the second half of the year thanks to inflation concerns.
“As the ASX reached a mid-winter peak in August, investors dialled back their equity purchases and increased their bond holdings. But as inflation became an increasingly live issue through the spring, interest in fixed income funds ebbed to more typical levels in October and then fell in November to the lowest level since April.”
