Equity funds available for sale in Hong Kong or Singapore have continued to see net inflows during the third quarter, driven by technology and China A-shares products, Morningstar said in a report.
In total, equity funds attracted $8bn during the quarter, $4.8bn of which came from technology strategies and $3.1bn from China A-shares offerings, according to Morningstar data, which include locally domiciled and cross-border open-ended funds that are registered for sale for retail investors in Hong Kong or Singapore.
The data include inflows from investors globally, given that cross-border funds were included in its analysis, Morningstar noted. Meanwhile, China-domiciled funds that are registered for sale in Hong Kong via the Mutual Recognition of Funds scheme were excluded.
“Equity funds staged a strong rebound since the first quarter, with technology and high growth funds benefiting the most from investors’ renewed appetite for risk,” Wing Chan, Morningstar’s Hong Kong-based director of manager research practice for EMEA and Asia, said in the report.
“Funds that invest in Chinese onshore markets, including A-shares and RMB bonds, received a boost of $4.7bn in Q3. This came on the back of FTSE Russell’s decision to include China in its global bond index, along with the continued strength of China’s A-share market this year,” he added.
On the fund level, the technology funds that attracted the most inflows include those that are managed by Blackrock, Franklin Templeton and JP Morgan Asset Management, according to Morningstar data. The top five technology funds by net inflows during Q3 are all cross-border funds.
| Top five technology funds by net inflows | Q3 net inflows ($m) |
| BGF World Technology A2 USD | 1,860 |
| Franklin Technology B Acc USD | 762 |
| JPM US Technology A (dist) USD | 619 |
| BGF Next Generation Technology A2 USD | 483 |
| Neuberger Berman 5G Connectivity USD A Acc | 460 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore.
JP Morgan Asset Management’s Pacific Technology fund, which is domiciled in Hong Kong, also had sizable inflows of $108m during the quarter, the data shows.
Meanwhile, funds managed by Allianz Global Investors, JP Morgan AM, Schroders and First Sentier Investors (previously First State Investments) led the inflows for China A-shares funds.
| Top five China A-share funds by net inflows | Q3 net inflows ($m) |
| AGI Allianz China A Shares AT USD | 1,282 |
| JPM China A-Share Opps A (acc) USD | 1,036 |
| Schroder ISF China A B Acc USD | 420 |
| JPMorgan China Pioneer A-Share* | 134 |
| FSSA China A Shares I USD Acc | 121 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore. *Hong Kong-domiciled
Of the top five China A-shares funds, only the JP Morgan China Pioneer A-Share Fund is domiciled in Asia.
Fixed income funds continue to dominate
Fixed income funds sold in Hong Kong and Singapore continue to dominate inflows during the third quarter, attracting $33.2bn in assets.
Net Flows by Key Asset Classes
| Asset Class | Net Assets (USD billion)
Sept 2020 |
Q3
Average Return |
Q3 Net Flows (USD billion) | Q2 Net Flows (USD billion) | Q1 Net Flows (USD billion) |
| Fixed Income | 739.0 | 3.42% | 33.2 | 33.8 | -38.8 |
| Equity | 809.6 | 8.17% | 8.7 | 11.8 | -10.3 |
| Allocation | 189.5 | 6.34% | -3.1 | -1.1 | -7.1 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore.
“We continue to see strong inflows into global flexible bond funds (see below), though the momentum appeared to slow as the quarter progressed,” Chan noted.
| Top five global flexible bond funds by net inflows | Q3 net inflows ($m) |
| PIMCO GIS Divers Inc E USD Inc | 2,023 |
| Jupiter Dynamic Bond L USD Q Inc HSC | 1,205 |
| PIMCO GIS Income E USD Acc | 1,167 |
| Schroder ISF Glb Crdt Inc A1 Acc EUR H | 521 |
| Allianz Strategic Bond AT USD | 383 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore.
While the inflows were sizable during the third quarter, fixed income funds recorded net outflows of $922.7m in September, the first time since April this year, the report said.
Net flows by Morningstar Fund Categories
| Morningstar Fund Category | Net Assets (USD billion)
Sept 2020 |
Q3 Average Return | Q3 Net Flows (USD billion) | Q2 Net Flows (USD billion) |
| Top five categories | ||||
| Global Flexible Bond – USD Hedged | 124.2 | 2.14% | 4.9 | 4.9 |
| Sector Equity Technology | 45.7 | 12.69% | 4.8 | 5.3 |
| USD Diversified Bond | 19.3 | 0.96% | 3.8 | 1.1 |
| China Equity – A Shares | 14.2 | 14.23% | 3.1 | 2.4 |
| Global Corporate Bond – USD Hedged | 46.8 | 1.83% | 3.0 | 9.1 |
| Bottom five categories | ||||
| EUR Moderate Allocation – Global | 58.4 | 8.41% | -3.5 | -0.6 |
| Asia ex-Japan Equity | 39.8 | 11.48% | -2.2 | -1.3 |
| Global Large-Cap Blend Equity | 32.5 | 7.72% | -2.1 | -1.5 |
| Global Flexible Bond | 20.0 | 1.57% | -1.9 | -1.7 |
| Global Emerging Markets Equity | 56.2 | 8.94% | -1.6 | -1.0 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore.
Fund flows by asset class
| Fixed Income | |
| Top five fixed income funds | Q3 estimated net inflows ($m) |
| PIMCO GIS Ttl Ret Bd E USD Inc | 2,194 |
| PIMCO GIS GlInGd Crdt E USD Inc | 2,060 |
| PIMCO GIS Divers Inc E USD Inc | 2,023 |
| Invesco Asian Flexible Bond A AUDH MD-1 | 1,699 |
| BGF China Bond A2 CHF | 1,597 |
| Bottom five fixed income funds | Q3 estimated net outflows ($m) |
| Eastspring Inv Asian Bond AHDM | -1,232 |
| Templeton Global Ttl Ret B(acc)USD | -1,076 |
| Templeton Global Bond B(Mdis)USD | -1,056 |
| H2O Multi Aggregate R SGD Hdg | -839 |
| Templeton Emerging Mkts Bd B(Qdis)USD | -707 |
| Equity | |
| Top five equity funds | Q3 estimated net inflows ($m) |
| BGF World Technology A2 USD | 1,860 |
| MS INVF Global Opportunity CH EUR | 1,428 |
| AGI Allianz China A Shares AT USD | 1,282 |
| JPM China A-Share Opps A (acc) USD | 1,036 |
| UBS (Lux) ES All China (USD) (SGD) P acc | 967 |
| Bottom five equity funds | Q3 estimated net outflows ($m) |
| Ninety One GSF Asian Equity C Inc USD | -899 |
| UBS (Lux) ES L/T Thms $EUR H P | -825 |
| AB Select US Equity C USD Acc | -779 |
| MS INVF Emerging Markets Equity C | -657 |
| AB SICAV I Low Volatility Eq C USD Acc | -583 |
Source: Morningstar Direct. Data includes locally domiciled and cross-border funds registered for sale in Hong Kong and Singapore.
