Global funds network Calastone has released its latest data examining investor capital flows in 1H 2024.
The firm found that equity funds endured their worst quarter on Calastone’s record with a significant $2.2 billion in outflows during Q1. Despite regaining $720 million in April as investors jumped on market dips, May and June outflows caused the asset class to see overall outflows of $2.2 billion for the six-month period.
Earlier this year, Calastone discovered that 2023 was the first year since 2019 that Australian investors were net sellers of equity funds. It had observed “massive sentiment shifts” away from equities, particularly in the Australian market, as local investors withdrew $724 million in capital from the asset class last year.
While equities suffered significant outflows in the first half of 2024, trading in the asset class saw strong activity during the six-month period, said Marsha Lee, managing director for Australia and New Zealand at Calastone.
“Despite record outflows in Q1, trading in equity funds was very active throughout 1H 2024, with gross turnover notably higher than for fixed income funds. This shows that investors are actively allocating capital and that equity funds remain dominant in portfolios,” she described.
Meanwhile, fixed income fund flows “continued their blistering pace” as investors looked for capital safety and strong yields, Calastone noted. The asset class enjoyed a record $6.3 billion in inflows during the first half of 2024 – nearly three times higher than the $2.2 billion inflows seen in 1H 2023.
Fixed income funds saw a particularly strong period during the June quarter with a growth of $3.4 billion – the highest quarterly net inflows Calastone recorded since Q3 2021.
Lee explained that the shift from equities to fixed income correlates with movements across the globe, as investors increasingly value stability amid market volatility.
“The ongoing flight to fixed income among Australian investors aligns with global patterns we’ve seen across our network, reflecting a widespread preference for stable, income-generating assets amid market volatility and economic uncertainties, likely magnified by higher local costs of living,” she said.
“Away from fixed income, net flows have remained relatively muted as perceivably riskier assets stay sidelined until central banks signal a return to looser monetary policies.”
This year also proved to be another difficult period for mixed asset funds, Calastone reported, which shed $1.7 billion in 1H after outflows of $1.6 billion in 1H 2023.
Overall managed accounts flows reached $1.3 billion in the first half of 2024, after outflows of $1.9 billion in Q1 were followed by strong gains of $3.2 billion in Q2.
