Global assets under management did not see much change in July says Otto Christian Kober, Lipper’s Global Head of Methodology.
Assets under management around the world stood at USD35.9 trillion at the end of the month, while estimated net inflows amounted to USD114.9 billion and market movements in the reporting month delivered an USD86.7 billion loss. Lipper finds that in terms of market share, the trend continues to favour Equity Funds (+0.2 per cent) over Bond Funds (-0.2 per cent) and Money Market funds (+0.1 per cent).
It wasn’t a great investment month with all asset types posting negative average returns, with commodity funds taking the biggest hit (-8.7 per cent) due to a further drop in energy prices after settling the Iran deal and a significant decline in precious metal prices. Further depreciation of the Euro versus US Dollar (-0.8 per cent) had an additional impact on Lipper’s USD calculated fund market statistics.
The firm notes that regardless of negative average returns, nearly all asset types except bond and commodity funds could profit from net inflows. “Leading the way was Money Market Funds with USD77.7 billion inflows, indicating some money being put aside because of uncertain market outlook, followed by Equity Funds with USD29.5 billion. Bond Funds lost USD0.6 billion and Commodity Funds some USD1.7 billion, due to outflows.
Apart from the two big Money Market Classifications US Dollar (USD41.0bn) and Euro (USD29.5bn), the Equity Global ex US (USD17.0bn), Equity Japan (USD9.4bn), and Equity Europe funds with USD7.1 billion estimated net inflows were able to attract the greatest interest from investors. Lipper writes that , as was the case in June, the Equity US fund classification had to accept redemptions, this time amounting to USD7.3 billion which marked this the worst classification for fund flows in the top 50 Lipper Global Classifications league.
Looking forward, the firm writes that the outlook for the securities market does not give a clear indication where it is heading. On the one hand it is anticipated that the FED will raise interest rates this year but, on the other, this seems unlikely as US macroeconomic data shows little signs of significant improvement. Cheap money (from borrowing at low rates) isn’t finding its way into the real economy, as investors prefer to stay on the sidelines, accepting lower interest rates for less risk in fixed income markets.
“The situation is not much different in Europe. It doesn’t look like the ECB will raise interest rates any time soon, due to highly-indebted southern European countries. For Europe as a whole, the money continues to flow into Equity markets, with notable movement into Money Markets as well.”