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Money managers under the microscope

from Global Investing:

Banks lead the equity sector flows

Banks and financials stocks have had a pretty good year. The Thomson Reuters Global Financials index is up by more than 20% in the last 12 months, and although the detritus of the financial crisis still offers the occasional sting, investors are starting to see brighter spots for the industry.

That confidence is increasingly obvious in the fund flows.

Our corporate cousins at Lipper track more than 7,000 mutual funds and ETFs which are dedicated to specific industry sectors. Dig a little into the data in this subset of funds, and you start to get a pretty good picture of where the biggest bets have been placed.

Just shy of 500 of these funds are focused entirely on banks & financials. Together they hold more than $46 billion in assets.

Last month, they suffered a total net outflow of just about $1 billion, but on a one-year view, 10 months of net inflows have driven an injection of over $10 billion. It amounts to a concerted bet on the sector, particularly in the U.S. where the bulk of assets are held, with the inflows equating to 22% of the latest published assets under management. You can see the evolution over the year in the chart below; cumulative gains or losses over the 12 months are shown in the blue area; monthly flows are shown by the red bars.

from Global Investing:

US investors prop up emerging equity flows

U.S. mutual fund investors are ploughing on with bets on emerging market equities, according to the latest net flows numbers from our corporate cousins at fund research firm Lipper. Has no one told them there's supposed to be a massive sell-off?

August was the 30th straight month the sector has seen net inflows, and the 9th straight month of net inflows above $1 billion. Sure, there's a downward trend from the February peak, but the resilience of demand is notable given doom-laden headlines about how EM markets will fare once the Fed feels its generosity is no longer required.

from Global Investing:

Signs of growth bets in the fund flows

Just as Germany helps to embolden hopes for a robust recovery in Europe, a look at detailed fund flows data offers more cheer to the optimists.

I've been seeing which equity fund sectors saw the greatest net inflows during July, and then filtering the top 20 by flows relative to the sector's total assets. There's a clear winner.

from Global Investing:

Signs of growth bets in the fund flows

Just as Germany helps to embolden hopes for a robust recovery in Europe, a look at detailed fund flows data offers more cheer to the optimists.

I've been seeing which equity fund sectors saw the greatest net inflows during July, and then filtering the top 20 by flows relative to the sector's total assets. There's a clear winner.

from Global Investing:

Emerging markets funds shun Brazil, South Africa

Global emerging markets equity funds have cut average weightings to Brazil and South Africa for the fourth straight quarter, according to the latest allocations data from fund research firm Lipper.

You can see a full interactive graphic of the allocations data here or by clicking on the snapshot below.

from Global Investing:

The only game in town

The extent of the surge to Japan by equity investors is written in sparkly 50-foot-high neon letters by the latest flows data out from Lipper.

We all know that Abenomics has, thus far, cast a spell over markets; the Nikkei is up about 80 percent since the middle of November, when Shinzo Abe first started looking like a bona fide challenger to win power. But it is still startling to see how flows into Japan have dominated investment behaviour.

from Global Investing:

LIPPER-Toil triumphs over talent for ‘star’ fund managers

The tumult caused by Richard Buxton’s move from Schroders to Old Mutual in March highlighted the veneration of “star” fund managers, those select few who apparently rise above the crowd to shine their light upon adoring investors.

We don’t need to dwell on Buxton’s track record (annualised return on his UK Alpha Plus fund of 13.7 percent over 10 years), but combined with Mark Lyttleton's departure from BlackRock - his own star rather faded of late - I am drawn to ponder the funds industry’s views of, and hunger for, stellar talent.

from Global Investing:

Rotation schmotation

We're at risk of labouring this point, but there has been some more evidence that this year's equity rally has not been spurred by a shift away from fixed income. The latest data from our corporate cousins at Lipper offer pretty definitive proof that there has been no Great Rotation, at least not from bonds to stocks.

Worldwide mutual fund flows numbers for February showed an overall move into equity funds of more than $22 billion, and a net flow to bond funds of about half that. Over 3 months it's a similar story, with a net inflow to equities of about $84 billion while bond funds sit close behind at about $75 billion. Little wonder then that there is some evidence at least of movements out of money market funds.

from Global Investing:

What flows out, must flow in?

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Much has been made of the flows into U.S. equities this month. Funds have rolled out the red carpet for a record $11.3 billion or so in net inflows over the first two weeks of the year, more when you factor in ETFs.

Just to cool the enthusiasm a little, it's worth remembering that this comes after a torrid 2012.

from Global Investing:

Survival of the fattest?

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Is there room only for the biggest, most aggressively-marketed funds in crisis-hit Europe?

Europe's ten best-selling funds have attracted nearly a third of net sales across bonds, equity and mixed assets so far this year, as the grey bars show in the following chart from Thomson Reuters' fund research firm Lipper.

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