Investing July 23, 2010

First Half 2010 Fund Flows Total $486B

July 23, 2010 (PLANSPONSOR.com) – The second quarter of 2010 may have been “challenging,” but the first half of the year actually generated twice the net flows to long-term funds than the same period a year earlier - $486 billion – according to Strategic Insight.
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A news release about the first-half data from SI, an Asset International company, said U.S. funds enjoyed $217 billion in flows, topping International/Cross-border funds that saw $147 billion in flows during the period. Local Europe funds had $63 billion in flows while Asia funds had $60 billion. Among the U.S. funds, Equity offerings had $57 billion in flows and Bond funds had $159 billion, SI said.  

“Year-to-date, bond funds continued to be the main driver of flows, adding a net $315 billion, followed by equity/mixed funds with a combined net intake of $120 billion; ‘other’ funds, mostly alternative “Newcits” and absolute return funds, collected almost $50 billion in cash flows, a sign of continued convergence between the traditional and alternative fund space,” said Daniel Enskat, Senior Managing Director and Head of Global Consulting at SI, in the news release. 

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Among the first-half product innovation and distribution trends: 

  • Top cash flow categories include global fixed income, Emerging Market and Asia Pacific bonds and equities, alongside innovative alternatives and absolute return. 
  • The top ten existing products in the U.S., Europe and Asia combined accounted for $150 billion in cash flows year-to-date, with another $30 billion in cash to the most successful fund launches. 
  • Franklin Templeton surpassed Blackrock to become the best selling cross-border long-term fund manager in the first half of the year, followed by Carmignac, Pictet, Allianz and Schroders  
  • Significantly different management fees for multi-billion dollar flagship funds resulted in a different profitability picture for top fund flow managers.  
  • The challenges of the second quarter could provide an opportunity for investment managers to cautiously reengage with and move investors from fixed income to selected equity themes in the second half of the year. 

“SI fund flow data from around the world shows that over half of the top selling funds in the first half of 2010 were ‘bridge products,’ moving investors from a thematic story to a long-term investment solution in dollar-cost-averaging buy-and-hold fashion with a growing concentration of flows to fewer managers and products, as distributors are restructuring their fund selection criteria post-crisis towards greater partnerships with selected firms,” Enskat said. 

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