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Key Asset Classes Endure Turmoil

Investors were keen for risk assets in 2021 and, despite market conditions, the first half of 2022 has not been a complete reversal, says Morningstar’s ‘Global Fund Flows.’ It shows while key asset classes have endured negative returns due to turmoil in investment markets, societies, the environment, and geopolitics, investors have withdrawn a net $136 billion, which translates to an organic growth rate of a mildly negative 0.29 per cent. Despite a bear market in stocks, equity funds had inflows of $131 billion for the first half of the year, growing at 0.47 per cent. This is likely explained by U.S.-domiciled funds’ programmatic rebalancing both within target date funds, models, and advised portfolios rather than retail investors ‘buying on the dip.’ Actively managed funds experienced outflows of $568 billion in the first half of 2022, whereas the six-month period ending December 2008 – the height of the Great Recession – had $681 billion in outflows. Fixed income funds have accounted for $422 billion, or 74 per cent, of actively managed outflows this year.

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