Funds Globally Capture $350B in First Half of 2011

Despite a difficult first half for investors, long-term mutual funds around the world realized $350 billion of inflows so far in 2011, with 23% going into exchange-traded funds (ETFs).

During May and June, all funds excluding money markets collected $80 billion on a net basis even as global concerns multiplied and as stock markets declined through most of the period, according to global fund research firm, Strategic Insight, an Asset International Company.  

ETFs captured $80 billion of flows worldwide in the first half and are on their way to achieve at least $150 billion of net gains this year, even as regulators focus more on the counterparty and systemic risks of synthetic products.  

Strategic Insight said the recent $2 billion launch in Japan of the Nomura Global Trend fund, based on Man Investments’ AHL managed futures strategy, signals an important milestone in the convergence between alternative investments, traditional regulated fund vehicles, and retail distribution.  In total, funds in Japan collected $20 billion of net inflows during May and June with a significant proportion benefiting real estate products.   

Up to now, the mutual fund industry in Asia lagged behind in the adoption of managed futures, long-short, market neutral, and other alternative and hedge fund strategies.  In contrast, alternative approaches within UCITS in Europe and ’40 Act funds in the U.S. attracted nearly $40 billion so far in 2011.  

Internationally, bond funds continued to post the bigger net gains during June while most equity products suffered net redemptions.  Templeton’s Global Bond fund experienced rising cash flows into its Luxembourg version with $2.2 billion in the latest month, and the U.S. mutual fund version kept pace with $2.0 billion.  In the U.S., Vanguard’s Emerging Market Equity ETF with $2.4 billion of net inflows was among the top sellers (right behind the S&P500 SPDR).    

Diversified emerging market equity funds collected $4 billion globally during June, bringing net gains in the second quarter to $18 billion.  Although an improvement in contrast to net redemptions in the first quarter, the pace is still slower than last year when the category recorded $105 billion worldwide, according to Strategic Insight’s Simfund Global databases.   

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