Volatility chokes inflows

The sub-prime fallout and resulting market volatility generated a significant turnaround in fund flows in the last quarter of 2007, delivering the weakest flows since 2003.

That is the analysis of data provided this week by actuarial and research house Plan for Life, which said retail managed funds fell by 1.9 per cent during the December quarter to $589.9 billion.

However, the significance of the rush created by the Government’s superannuation changes was made clear by the fact that inflows were up 11.1 per cent across the whole year.

The Plan for Life data revealed that gross inflows for 2007 were up 37.9 per cent over 2006 to $337.8 billion, with St George, Commonwealth/Colonial, ING, National Australia/MLC and Macquarie experiencing the highest percentage increases.

Plan for Life also reported a $3.3 billion fall in unitised wholesale funds during the December quarter to $312.3 billion, but noted that they remained up 5.7 per cent across the year.

It said most major managers reported increases in their wholesale funds under management during 2007, with AXA Australia up 21.1 per cent, AMP up 20.1 per cent, State Street Global Advisers up 19.7 per cent, National Australia/MLC up 19.6 per cent and Vanguard Investments up 13.3 per cent.

It said going against this trend had been UBS Global Asset Management, down 13.8 per cent, the result of a significant decrease in business, and Commonwealth/Colonial, which fell 5.9 per cent.