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US and global equity top global fund flow ranking

The least popular categories worldwide were, intriguingly, also within the US equity space: US equity large cap growth funds and small cap funds registered net outflows of respectively $41bn and $9bn. The latter figure also applied for high yield bond funds.

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Equities take the crown, thanks to US

Equities are the most popular category overall, but this is mainly because the United States remain the world’s dominant investment force. US-based investors are responsible for $329m in net inflows into equity funds, more than 75% of the total. By contrast, Asian investors pulled out a net $100m from equity funds, while European investors chipped in only a net $1bn. However, this last figure excludes cross-border flows of $87bn into funds domiciled in low-tax countries such as Luxembourg and Ireland, where many European investment funds are registered.

Europe prefers fixed income

While American investors were in love with equities in 2014, not surprising considering the stellar returns delivered by the S&P 500 over the year, European investors were more into asset allocation funds, fixed income and absolute return. Multi-asset funds registered record-breaking net inflows of more than $100bn from European investors, while fixed income net inflows comfortably exceeded those into equity funds (see chart). On a global basis, fixed income saw the highest increase in net inflows: from $127bn in 2013 to $371bn in 2014.

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In terms of total assets under management in mutual funds, the US is still dominant as a domicile, but Europe and especially Asia are catching up. At the end of 2014, 57% of global assets were domiciled in the US, up only 3.5% from the previous year. Asian assets grew almost four times faster, at 12.8%. European and cross-border assets (mainly Luxembourg- and Ireland-domiciled funds) also had a higher growth rate of 3.9% and 10.4% respectively.

Part of the Bonhill Group.