Weak Equity, Bond Markets Produce Q108 Declines

According to ICI data, the decline was due in part to weakness in equity and bond markets worldwide and in part to non-reporting by one country.

Net cash flow to all funds increased to $394 billion in the first quarter, up from $382 billion in the fourth quarter of 2007. Long-term funds experienced net outflows of $93 billion in the first quarter, compared with a net inflow of $131 billion in the fourth quarter.

Bond fund net flows actually strengthened, with a net inflow of $13 billion worldwide in the first quarter compared with a net outflow of $29 billion in the fourth quarter.

This was more than offset by weakened net flows for equity funds and balanced/mixed funds, which combined had an outflow of $147 billion in the first quarter compared with an inflow of $126 in the fourth quarter. Inflows to money market funds increased substantially, with $487 billion in inflows in the first quarter of 2008 compared with $250 billion in the fourth quarter of 2007.

Hong Kong did not report data for the first quarter of 2008, with $818 billion in assets in the fourth quarter of 2007; the absence of Hong Kong data accounted for 61% of the decline in worldwide mutual fund assets in 2008 first quarter.

On a U.S.-dollar-denominated basis, long-term fund assets decreased but money market fund assets increased. Assets of equity funds fell 14.8%, with $10.6 trillion in assets at the end of the first quarter of 2008. Balanced/mixed fund assets declined 5.2% and bond fund assets declined 1.3% in the quarter. Assets of money market funds increased 13.2% to $5.6 trillion at the end of the first quarter.

The full data is available here.