Inflows peak as equities home bias turns
The home bias for Australian equities turned in 2013 with $5.79 billion pulled from Australian share funds despite double-digit share market returns.
At the same time concerns around the US Federal Reserve's quantitative easing program resulted in an exodus from bond funds, with $2.3 billion withdrawn from fixed-income strategies.
Despite these two shifts, inflows into Australian-managed funds reached $10.35 billion, the highest point in four years, with net inflows into multi-sector strategies reaching $17.79 billion according to data collected by Morningstar.
In its second annual Global Flows Report, Morningstar stated that multi-sector strategies were boosted by regular superannuation contribution flows which in turn obscured the weak demand for single-sector vehicles used for discretionary investments. The greatest beneficiary of these superannuation flows was AustralianSuper which attracted $4.86 billion in inflows.
Morningstar stated the move away from Australian equities was the result of concerns about the local economy moving away from the resources boom, with investors placing $847 million into global equity strategies during 2013.
Magellan Global attracted a record level of international equities inflows, taking in nearly $1.7 billion — or more than 80 per cent of its 2012 assets base.
Interest in indexed equities investments also spiked in 2013, with Vanguard and BlackRock attracting inflows of more than $900 million between them into their international equities index funds. However this was offset by outflows from bond and fixed interest index funds by investors concerned that passive funds would not offer capital protection if interest rates were to rise.
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Total monthly ETF inflows declined by 28 per cent from highs in November with Vanguard’s $21bn Australian Shares ETF faring worst in outflows.
