Excluding money market funds, total long-term mutual fund net flows in Asia-Pacific totaled $64.8bn in the first half of the year compared to $298.8bn during the same period last year.
Asia fund flows
|2016 H1||2015 H1|
US $ billions.
Source: Strategic Insight. The above totals exclude money market funds, which had $49.2bn in outflows in the first half of 2016.
Bond fund surge
First half flows were led by investments in bond funds.
“Amid market volatility and increasing investors’ demand for stable, low-risk investment products, bond funds attracted the most new money at $42bn, nearly 80% of which came from China,” said Liu.
“Similarly, guaranteed funds attracted more than $26bn in net flows with virtually 100% of the new money contributed by Chinese investors.”
However, the China Securities Regulatory Commission has responded to the rapidly increasing demand by halting approval for new guaranteed funds in April this year and by drafting tighter regulations aiming at reducing the risks of guaranteed funds.
In terms of geography, Japan led the contributions with nearly $30bn so far in 2016.
Fund flows by region H1
Source: Strategic Insight
In Japan, equity funds, mostly passive equity ETFs, contributed the most inflows totaling nearly $20bn, the firm said. Actively-managed real estate funds also took in over $13bn in net flows.
“Interestingly, many of best-selling active funds in Japan are sub-advised by international managers,” said Bryan Liu, the firm’s managing director of global research.
Strategic Insight estimates that over $200 bn or about 25% of the total assets in the Japanese fund industry is sub-advised by mostly international asset managers, among them Cohen & Steers, Pimco and Western Asset/Legg Mason.