Investors across Asia flocked to fixed income funds in 2024, marking a dramatic upswing, with net inflows surging nearly threefold compared with 2023, according to the latest Global Fund Flow Data from Calastone.
The region recorded $26.38bn of net inflows into fixed income strategies between January and November, surpassing the total combined net inflows of the previous five years. Inflows in Hong Kong rose from $3.8bn in 2023 to $11.67bn in 2024, more than tripling, while in Singapore they nearly doubled from $3.01bn to $6.49bn.
This trend reflects a global shift toward fixed income, driven by falling interest rates and cautious economic sentiment, according to the global funds network, which processes $300bn of investment value across 56 countries each month.
Justin Christopher, head of Asia at Calastone, said: “The decisive pivot towards fixed income reflects a strategic response to lower interest rates, while sharp equity fund outflows, coupled with sustained demand for mixed asset funds, underscore the importance of diversification in navigating uncertainty.”
Asia equity funds fell significantly out of favour for the third consecutive year, plunging from a positive inflow of $1.9bn in 2023 to an outflow of $0.88bn in 2024, driven primarily by local investors shedding assets.
This was a notable contrast to 2021’s $11.75bn net inflows, with the shift highlighting growing investor caution toward regional equities and a broader preference for more predictable yield opportunities.
Meanwhile, mixed asset funds were quite resilient, posting net inflows of $1.43bn, but were substantially lower than $11.8bn seen in 2021. Nevertheless, some investors clearly sought strategies to navigate uncertainty through diversified exposure across asset classes as investors.
As regularly reported, the ESG investment landscape in Asia took a sharp downward turn in 2024, with net outflows hitting $3.5bn, which was the largest decline on record. This sharp fall contrasts with the $4.91bn of inflows in 2021, as investors pulled back sharply amid shifting market dynamics and wavering confidence in green strategies.
“Record-breaking outflows from ESG strategies point to growing scepticism around sustainable investments, as shifting market dynamics and wavering confidence continue to reshape investor priorities,” said Christopher.
