Wed, 18 Dec 2013
Slowing economic growth in emerging markets weighed on hedge funds in November.
As yields rose, both taxable- and municipal-bond funds saw record monthly redemptions in absolute terms in June.
Money has been quickly pouring in to and out of risk assets in the bond markets recently, making for a volatile ride.
Equity funds have experienced outflows over the last five years, but the exodus is not as extreme as it's portrayed.
September and third-quarter asset-flows data show that investors remain cautious of interest-rate risk and a fully valued stock market, and instead prefer nontraditional bonds and foreign equities.
ETF and open-end asset flows combined show a strong preference for bonds, emerging markets, and passive funds, while active U.S. stock fund managers and money market funds have suffered the brunt of outflows.
Although investors may remain broadly skeptical of equity markets, asset flow data suggest they could be taking more risk than expected in other asset classes.
A desire for more control over asset allocation, disappointment with performance, and a sharp focus on fees may be behind the shift toward passive equity funds.
Strong 2011 returns and perceived safety led to continued popularity for bond funds last month, while domestic growth funds suffered redemptions.
Market gains have been the only driver of equity AUM growth for most of the asset managers.
Morningstar's Christine Benz provides some useful tips for those getting their feet wet in fixed-income investing.
Even though credit worries in Europe dominated the headlines, investors took out their frustrations on U.S. stock funds.
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