Asia was also the only region with significant inflows into equity funds last year while investors in other parts of the world largely preferred fixed-income and money market categories while divesting from equities.
The report, authored by Alina Lamy, senior analyst for quantitative research, and Timothy Strauts, director of funds quantitative research at Morningstar, analysed 2016 global flows into open-ended mutual funds and exchange-traded products (ETPs).
Asia fund assets grow
Asia’s fund industry saw total net assets rise 11.4% in 2016. Some of it was thanks to Japanese central bank buying local ETPs, according to the report.
The rates of asset growth in developed economies were below 3%, while the Middle East experienced a 5.4% decline. Morningstar attributes that to weak oil prices.
Inflows into Asia-domiciled fixed-income funds amounted to $51bn (£42bn, €48.3bn) and those into equity funds $47.8bn in 2016 according to the report. Mixed-assets and miscellaneous funds gathered another $34.7bn.
However, Asian investors showed little confidence in commodities, with $400m in net outflows. By comparison, their counterparts in Europe and the US and investors in cross-border funds, together invested $29.8bn in net new assets in the sector in 2016.
Cross-border funds are domiciled predominantly in Luxembourg or Ireland but sold worldwide.
Flight to safety
In Europe, investors put $32.6bn into fixed income and $41.6bn into money market products, while pulling $20.2bn out of equity funds. Cross-border fund investors showed similar behavior with $85.2bn flowing into fixed income funds, $59.4bn into money market and $51.1bn taken out of equity funds.
In the US, investors added $192.4bn into fixed income, $94.8bn into money market and $33.5 into property funds. Flows into equity funds were negligible by comparison, but mixed-assets funds were hit by $42.6bn of outflows.
Globally, flows into fixed income and out of equity dominated the year, except for November when they reversed in the aftermath of US presidential elections. In December, flows into both equity and fixed income funds were positive.