Investor enthusiasm wanes in Q3
The enthusiasm of Aussie investors waned in Q3 as the quarter progressed, with net inflows to all equity funds of having slipped to $1.28 billion in August from $2.01 billion in July, according to the quarterly Fund Flow Index from Calastone.
In September, investor confidence slumped and net investment in Australia fell to $342 million, which was 60% below the monthly average for the last year.
The largest global funds network showed that between July and September investors added $3.63 billion to managed equity funds, up from $605 million in the previous quarter when investors were spooked by the global bear market.
At the same time, Australian equities benefited disproportionately from new cash for equity funds as domestically focused equity funds accounted for 37% of the net inflow between July and September and the net purchases of Australia-focused managed equity funds, which stood at $1.27 billion, reached the second-largest quarterly total in the last four years.
Global equity funds also registered gains at $1.86 billion, while only Asia-Pacific and European funds were losing capital.
The index also found that active funds and ESG (environmental, social, governance) absorbed Q3’s new capital, with active funds having accounted for three quarters of the total net inflow and two fifths was directed to ESG funds ($1.43 billion).
Also, initial optimism of investors on fixed income funds during bond market rally slipped as yields soared and prices fell.
The market saw record selling of fixed income funds between April and June, which reflected an increase in bond yields in Australia and globally, but then bond markets began to drop in august, with the Australian 10-year benchmark having seen its yield drop by 120 basis points.
Managed mixed asset funds followed the same pattern, with large net inflows in the quarter ($1.53 billion), but then they dropped away in September, while real estate funds reversed their April to June outflows with net capital of $259 million in Q3.
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