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Funds in Asia see huge Q1 outflows

Around $39bn fled funds in Asia during Q1 this year, and one asset class took an enormous hit, according to data from Strategic Insight.

Policy moves in China opened the floodgates as investment capital sought a better home during the quarter ended 31 March.

Money market funds had the largest outflow with $64.5bn withdrawn from the asset class. Mixed asset funds had the second biggest outflow at $40bn.

“As China loosened monetary policy, the returns from money market funds began to fall,” said Bixue Zhou, research analyst at Strategic Insight.

“Investors then moved money to bond and guaranteed products to better secure their assets.”

Outflows from mixed asset funds were mainly from what Morningstar categorises as “aggressive allocation funds”, he added. “They appeared to be less attractive in a volatile stock market as they have higher equity exposure.”

Big gainers

In terms of inflows, equities led with $26.2bn, followed by bonds ($20.2bn). Both represented an increase from Q1 2015.

Third was guaranteed funds, which had $11bn in net inflows compared to $1.4bn duirng the same period in 2015.

“The $11 billion of net inflows into guaranteed funds was almost entirely contributed by new guaranteed funds launched in Q1,” Zhou said.                                    

The total capital outflows of funds in Asia were a huge reversal compared to the previous two years, when Q1 recorded large capital inflows, the data shows:

Total net new fund flows in Asia  (US$bn)

 Q1 2016   Q1 2015   Q1 2014 
 -(39)  94.5  103
Source: Strategic Insight


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