Fixed income strategies are big asset winners in Q1
Long-only asset managers reported Q1 2021 institutional assets under management of USD35.1 trillion to eVestment in the first quarter of the year, according to the just-released eVestment Traditional Asset Flows Report.
Net institutional flows totalled +USD168.2 billion in Q1 and +USD172.3 billion over the past four quarters, according to the new report.
Active and passive fixed income strategies were big asset winners in the first quarter. Net institutional flows for fixed income strategies, excluding cash management products, totalled +USD228.1 billion in Q1 2021. Active US fixed income managers received net allocations of +USD109.8 billion with core bond, long duration government/credit, MBS and TIPS managers seeing outsized inflows. Passive US products also saw sizeable allocations (+USD57.0 billion), led by core bond, short duration and intermediate duration strategies. Non-US fixed income strategies gained +USD61.2 billion in new assets during Q1 2021.
On the other hand, active equity strategies saw large outflows in the first quarter, at -USD116.7 billion. Active US equity outflows measured -USD92.5 billion. China and Asia ex-Japan equity were among the few equity strategies which saw investor interest during Q1 pulling in +USD11.2 billion and +USD3.7 billion, respectively.
Passive equity strategies saw net inflows of +USD37.8 billion in Q1 2012. Passive US (+USD49.4 billion) and ACWI ex-US equity products (+USD7.7 billion) drove the entirety of the gains. Interestingly, within the passive U.S. equity space, the report finds inflows for almost every strategy except those tied to the Russell 1000, from which investors redeemed -USD21.4 billion in Q1.
Global multi-asset strategies saw net institutional inflows of +USD4.2 billion in Q1 2021, snapping an outflow streak which began in Q2 2018 and totalled -USD159.1 billion. Global tactical asset allocation strategies contributed inflows of +USD4.3 billion and global balanced inflows of +USD3.3 billion. Diversified growth funds, however, posted net redemptions of -USD5.0 billion. U.S. multi-asset strategy flows were roughly flat in the quarter at -USD0.1 billion. U.S. TAA products saw inflows of +USD1.1 billion, countered by US balanced outflows of -USD1.2 billion.
UK-domiciled investors were net allocators to a number of equity universes, most notably US, global, Japan and Asia-Pacific equities. UK investor flows totaled +USD20.7 billion for US equity strategies, dominated almost entirely by passive S&P 500 and other large cap index products. Allocations to Asia-Pacific equities went largely to China A-Shares and Asia ex-Japan managers. At the other end of the spectrum, U.K. investors redeemed -USD4.9 billion from UK equity managers in Q1 2021 and -USD4.0 billion from UK fixed income managers. Europe equities and bonds also saw outflows from this investor group to the tune of -USD1.5 billion and -USD1.3 billion, respectively.
Investors domiciled in Europe, excluding the UK, allocated +USD10.0 billion to global equity managers, +USD9.8 billion to Asia-Pacific equity and +USD4.4 billion to US equity in Q1 2021. Thematically, all cap growth and sector focused products drove flows into global equities, China A-Shares into Asia-Pacific equities and passive S&P 500 products into US equities. Fixed income flows from Europe ex-UK investors were broadly net negative during the quarter. The largest redemptions came from global fixed income managers, -USD13.7 billion in Q1.
The quarterly eVestment traditional asset flows report looks at the movement of funds around the globe based on data submitted to the eVestment database from asset managers around the world. The report looks at flows from global, regional and country perspectives across traditional equity and fixed income investment strategies.