Bangkok--29 Mar--HSBC
***More fund managers neutral towards Asia ex-Japan and Greater China equities***
***All fund managers are positive on Asian bonds***
One hundred per cent of the respondents in the latest HSBC Fund Managers’ Survey are taking an overweight view towards North American equities in the first quarter of 2011, up from 25 per cent last quarter.
Global fund managers shifted away from Asia-Pacific ex-Japan equities, from 75 per cent with a positive outlook last quarter to 50 per cent in 1Q11. And 43 per cent of fund managers are neutral towards Greater China equities, up from 33 per cent in 4Q10 amidst concerns about tightening measures and credit control policies in the Mainland.
Bruno Lee, Regional Head of Wealth Management Asia-Pacific, said: “HSBC’s Fund Manager Survey shows a significant change in investor confidence. All respondents are bullish on equities, and none on bonds or cash. Fund managers are looking to North American equities because of improving economic conditions, merger and acquisition activities and encouraging company reports. At the same time, fund managers are lukewarm on Asia-Pacific ex-Japan due to concerns over rising inflation in the region, and less bullish on Greater China equities as the market takes in the impact of ongoing austerity measures to contain inflation.
“However, all fund managers surveyed turned positive towards Asian bonds in 1Q11 from 60 per cent last quarter, reflecting confidence in Asia’s economic fundamentals and the financial strength of select governments, sectors and corporate issuers in the region. Recent developments in the Middle East and Japan are expected to cause some uncertainty and market volatility, tempering the optimism in the first quarter, but the general view on long-term global economic recovery remains positive.”
1Q 2011 asset allocation strategy Underweight Neutral Overweight
Equities 0% (0%) 0% (50%) 100% (50%)
Bonds 43% (14%) 57% (86%) 0% (0%)
Cash 71% (57%) 29% (29%) 0% (14%)
Note: Figures in brackets indicate results from 4Q10.
HSBC’s quarterly Fund Managers’ Survey analysed 12 of the world’s leading fund management houses1 on the basis of funds under management (FUM), asset allocation views and global money flows. The net money flow2 estimates are derived from movements in FUM versus index movements in the equivalent class. At the end of 4Q10, polled fund managers reported aggregated FUM of US$3.98 trillion representing approximately 16.4 per cent of the estimated total global FUM3.
4Q10 global asset flows
Funds under management (FUM) rose by US$98.6 billion at the end of 4Q10, up 2.54 per cent from 3Q10 as all funds, except money market funds, recorded an increase in FUM. Money market funds dropped by US$33.5 billion. Equity funds led the increase, rising by US$79.1 billion, while bond funds were up by US$23.6 billion.
Net fund flows (as a percentage of FUM), which are derived by subtracting market growth from FUM growth across various asset classes during 4Q10, were:
Asset class End 4Q10 End 3Q10
Greater China equities +9.6% -1.0%
Emerging market equities +5.9% +1.9%
Asia-Pacific ex-Japan equities -0.3% +5.2%
Europe including UK equities -0.9% -3.8%
North Americaequities -3.6% -2.9%
Global equities -4.7% -3.9%
Japanequities -7.7% -1.3%
Global bonds +11.6% +9.4%
High yield/Emerging markets bonds +7.2% +10.9%
Europe including UK bonds -0.8% -4.3%
US bonds -0.9% +2.8%
In the fourth quarter of 2010, funds flowed into fast-growing regions. Greater China equity funds saw inflows worth US$2.2 billion on the back of sustained and resilient economic growth. Emerging markets equities also registered strong inflows of US$5.5 billion. In a low-interest rate environment, global bonds attracted inflows reaching US$16.9 billion. High yield/emerging markets bonds saw inflows of US$7.9 billion albeit 26 per cent lower than previous quarter’s inflow as credit spreads narrowed, offering limited growth potential.
Mr Lee said: “Last quarter, our survey pointed to fund managers’ bullish views on emerging markets assets. Fund flows in 4Q10 reflected this asset allocation strategy as equity markets in Asia-Pacific ex-Japan and Greater China presented growth opportunities. In the ongoing low-interest environment, investors continued to invest into bonds.
“Our survey aims to help investors stay alert for emerging investment growth opportunities and rebalance and diversify their portfolios according to their individual investment goals and risk appetite.”
4Q10 HSBC Fund Flow Tracker
The HSBC Fund Flow Tracker, which represents the net value of money flows since 3Q06 showed that equity funds continued to register outflows in a volatile global equity market. At the end of 4Q10, equity funds posted net outflows of US$115.1 billion compared to net outflows of US$64.4 billion in the previous quarter. The increase was largely due to outflows from North American equities, as cautious investors locked in profit after strong quarterly performance.
Net inflows to Greater China equities rose 30 per cent to US$9.4 billion in 4Q10 (vs US$7.2bn in 3Q10)Net inflows to Emerging Markets equities increased 19 per cent to US$34.3 billion in 4Q10 (vs US$28.8 billion in 3Q10)Net inflows to Asia-Pacific ex-Japan equities fell slightly to US$13.7 billion from US$13.9 billion last quarterNorth American equities registered outflows of US$14.5 billion compared to US$1.8 billion in the previous quarterOver the same period, bond funds posted record cumulative inflows of US$294.5 billion, up 15 per cent from previous quarter in a low-interest and high liquidity environment.