ASSET FLOWS REPORT Second Quarter 2015
About the evestment Asset Flows Report Asset Flows Report This report is intended to show the flow of institutional funds across regions, universes and products. We welcome all questions, comments and feedback: +1 866 408 3273 support@evestment.com The methodology for calculating flows is in the appendix of this document. All flow data is calculated based on a bottom-up approach. Flows are calculated for each product and summarized at the universe and asset class levels. The universes that are used for the flows in this report are identical to the universes and classifications that exist within the evestment database. About evestment evestment provides a flexible suite of easy-touse, cloud-based solutions to help global investors and their consultants select investment managers, enable asset managers to successfully market their funds worldwide and assist clients to identify and capitalize on global investment trends. With the largest, most comprehensive global database of traditional and alternative strategies, delivered through leading-edge technology and backed by fantastic client service, evestment helps its clients be more strategic, efficient and informed. 2
Executive Summary The institutional asset management industry reported net outflows totaling $43.5 billion in 2Q 2015 after outflows of $90.5 billion in the first quarter. Following three consecutive quarters of outflows, fixed income products reported inflows totaling $48.2 billion. Equity strategies reported net outflows of $100.9 billion, marking the ninth consecutive quarter of net outflows for the asset class. Balanced/multi-asset products recorded net inflows totaling $9.2 billion, continuing the trend of institutional inflows. Second quarter inflows into fixed income markets were driven by US bonds which reported net inflows of $31.5 billion. Following outflows of $13.8 billion in the first quarter, US long duration bonds reported net inflows of $16.3 billion in 2Q 2015. US corporate bonds continued to attract assets from institutional investors in the second quarter, bringing the 2015 inflows total to $16.8 billion. Emerging markets debt recorded outflows of $3.9 billion in 2Q 2015 after institutional inflows in the first quarter. Despite outflows from emerging markets fixed income, emerging markets corporate bonds reported inflows of $619 million in the second quarter. Balanced or multi-asset strategies have seen consistent inflows from institutional investors in recent quarters. Second quarter inflows into the evestment Global Balanced/TAA universe totaled $8.0 billion. Asset flow activity indicates investors are favoring non-us strategies as the evestment All Non-US Balanced / Multi-Asset universe reported inflows of $9.3 billion, while US balanced strategies reported outflows of $206 million. Over the past five quarters international equities have seen a significant increase in search activity from consultants and investors using the evestment Database. This database activity is a leading indication of asset flow activity in subsequent quarters. The evestment All EAFE Equity universe reported inflows of $12.7 billion in the second quarter, bringing the 2015 total to $18.3 billion. Despite outflows of $364 million in the second quarter, ACWI ex-us equities have seen inflows of $4.1 billion through the first half of 2015. The evestment Global Unconstrained Fixed Income universe reported inflows of $2.1 billion in the second quarter after inflows of $3.9 billion in 1Q 2015. Institutional AUM in the evestment Global Unconstrained Fixed Income universe reached an all-time high of $205.3 billion in the second quarter. Following six consecutive quarters of inflows, emerging markets equities recorded outflows of $3.5 billion in the second quarter of 2015. Outflows were driven by $5.8 billion flowing out of the evestment Emerging Markets All Cap Equity universe. Emerging markets large cap strategies reported inflows of $752 million, marking the seventh consecutive quarter of net inflows for the universe. Domestic equities continued to see significant outflows in the second quarter with net outflows of $85.5 billion. Once again, US large cap value strategies experienced the largest outflows of all US equities with $18.0 billion redeemed in 2Q 2015. Following inflows of $5.7 billion in the first quarter, the evestment Passive S&P 500 Equity universe reported net inflows of $2.3 billion in the second quarter. Global equities reported outflows of $14.7 billion from institutional investors in the second quarter. Global passive equities reported outflows of $7.0 billion following inflows of $8.4 billion in the first quarter. Large cap core strategies reported inflows of $1.3 billion, the largest inflows of any global equity universe. Global bonds reported net inflows of $20.4 billion in the second quarter after outflows of $15.4 billion in 1Q 2015. Inflows into the asset class were led by $7.7 billion flowing into global aggregate bonds in 2Q 2015. 3
Executive Summary - Flows by Account Domicile United States: US domiciled accounts led all account domiciles in 2Q 2015 with $89.9 billion in outflows. Outflows were once again driven by redemptions from US equity strategies. US domiciled accounts redeemed $96.0 billion from US equities while US bonds reported inflows of $3.3 billion. Europe ex-uk: Investors in Europe ex-uk were net buyers in 2Q 2015 with inflows totaling $7.5 billion. Inflows were driven by $7.9 billion allocated to US bonds in the second quarter followed by $3.7 billion in net inflows into European bonds. United Kingdom: UK domiciled investors were net sellers during 2Q 2015 with outflows of $6.5 billion. Outflows from UK domiciled investors were led by $4.9 billion redeemed from global equity. UK investors favored global bonds in the second quarter, leading to inflows of $5.7 billion. Canada: Canadian domiciled investors reported outflows of $3.6 billion during 2Q 2015. US equity continued to see redemptions from Canadian investors resulting in net outflows of $2.3 billion. Following outflows in 1Q 2015, US bonds reported net inflows of $1.2 billion from Canadian investors in the second quarter. Africa/Middle East: Investors domiciled in Africa and the Middle East were net sellers during 2Q 2015 with net outflows totaling $13.0 billion. Redemptions were led by $5 billion in net outflows from ACWI ex-us equity. Australia: Australian domiciled investors recorded net outflows of $6.4 billion in the second quarter after outflows of $6.7 billion in 1Q 2015. Outflows from Australian investors were driven by $3.4 billion redeemed from global stocks. Japan: Japanese investors were net buyers in the second quarter of 2015 with net inflows of $15.3 billion. As in the first quarter, US bonds were the recipient of the largest flows from Japanese investors. US bonds reported inflows of $12.3 billion in the second quarter of 2015, bringing the 2015 total to $22.1 billion. Asia ex-japan: Asia ex-japan investors had net inflows of $857 million in 2Q 2015. Following two quarters of net outflows, the evestment Emerging Markets equity universe reported inflows of $2.2 billion from investors in Asia ex-japan. Hong Kong: Hong Kong domiciled investors reported net outflows of $3.5 billion in 2Q 2015. In a shift from the first quarter, investors in Hong Kong reported outflows from US equity totaling $3.1 billion. Latin America: Investors domiciled in Latin America reported inflows of $986 million in the second quarter. Inflows were led by $703 million flowing into UK bonds and $479 million flowing into US bonds. Singapore: Investors domiciled in Singapore reported outflows of $290 million during 2Q 2015 after outflows of $922 million in the first quarter. Outflows were led by $408 million flowing out emerging markets equity in the second quarter. 4
Executive Summary Flows by Account Type Corporate: Corporate accounts had net inflows of $10.3 billion in the second quarter following outflows of $51.8 billion in 1Q 2015. Inflows were driven by $25.6 billion flowing into US fixed income following outflows of $17.0 billion in the first quarter. Corporate pensions also shifted positions on emerging markets equity resulting in net inflows of $8.7 billion. Public Funds: Public funds had net outflows of $25.1 billion during 2Q 2015. Outflows were driven by US equity with net outflows of $18.2 billion. As in the first quarter, emerging markets equity attracted the largest inflows from public funds, reporting net inflows of $2.3 billion in 2Q 2015. Insurance: Insurance accounts had net inflows of $8.2 billion in the second quarter after inflows of $1.6 billion in 1Q 2015. Inflows were driven by US focused strategies. US bonds reported inflows of $4.3 billion from insurance companies, while US equities reported inflows of $4.4 billion in 2Q 2015. Defined Contribution: DC plans recorded net outflows of $6.8 billion in the second quarter of 2015. US fixed income continued to see redemptions from DC plans leading to outflows of $5.2 billion in 2Q 2015. DC plans continue to allocate assets to global balanced strategies. Second quarter inflows into the evestment Global Balanced/TAA universe totaled $543 million. Foundations and Endowments: Foundations and endowments were net sellers in 2Q 2015 with outflows of $2.9 billion. In a shift from previous quarters, foundations and endowments were net buyers of US fixed income, resulting in net inflows of $888 million in 2Q 2015. Union/Multi-Employer: Union/multi-employer accounts recorded net outflows of $5.4 billion in 2Q 2015. Union/multi-employer accounts continue to redeem assets from US equity, with net outflows of $1.5 billion in the second quarter. Global bonds also reported outflows from Union/multi-employer accounts totaling $1.4 billion. Sovereign Wealth Funds: Sovereign wealth funds were net sellers in 2Q 2015 with outflows of $4.0 billion following outflows of $11.7 billion in the first quarter. Redemptions were led by $5 billion in net outflows from ACWI ex-us equity, while US bonds were the recipient of $4.5 billion in net inflows from sovereign wealth funds. Health Care: Health care accounts recorded inflows of $687 million during 2Q 2015. Health care accounts remained net buyers of US bonds, resulting in inflows of $1.4 billion. Outflows were led by $339 million redeemed from global equities in the second quarter. 5
COMPANY DESCRIPTION evestment provides a flexible suite of easy-to-use, cloud based solutions to help global investors and their consultants select investment managers, enable asset managers to successfully market their funds world wide and assist clients to identify and capitalize on global investment trends. With the largest, most comprehensive global database of traditional and alternative strategies, delivered through leading-edge technology and backed by fantastic client service, evestment helps its clients be more strategic, efficient and informed. For more industry research visit: www.evestment.com/resources/research-reports For more on evestment s research platform visit: www.evestment.com/products/research Important Notice: The information presented here is for information purposes only. This information is not investment advice nor is it a solicitation or an offer to buy or sell any securities mentioned in this report. The information presented is provided asis and all representations and warranties, express or implied (by common law, statute or otherwise) are hereby expressly disclaimed to the fullest extent of the law. Without limiting the foregoing, evestment and its affiliates disclaim the implied warranties of merchantability and fitness for a particular purpose and make no warranty as to the accuracy, completeness or reliability of this information. evestment assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on this information. LOCATIONS Atlanta London +1 (877) 769 2388 +44 (0) 20 7651 0800 support@evestment.com europe@evestment.com New York Sydney +1 212 661 6050 +61 (0) 2 8211 2717 support@evestment.com australia@evestment.com Dubai Hong Kong +971 561380679 + 852 2292 2390 support@evestment.com asia@evestment.com Edinburgh +44 (0)131 564 0736 MEDIA CONTACTS Mark Scott evestment Corporate Communications mscott@evestment.com +1 (678) 238 0761 Jon Stone Brad Jordan Kwittken (US) Kwittken (UK) jstone@kwittken.com bjordan@kwittken.com +1 646 747 7161 +44 207 401 8001 Ni Ko Moo Ryan Communication niko@ryancommunication.com +65 6876 5782 Disclaimer The data included in this report are a compilation of performance data provided by evestment unless otherwise noted. This report should not be considered to be investment advice and is not a recommendation, endorsement, or solicitation for any investment manager or its services or of any securities referred to herein. All quarterly returns are provided directly by the manager of the product shown. While the information contained herein has been obtained from sources deemed reliable, evestment nor any information provider guarantee that it is accurate or complete or make any warranties with regard to the results that have or may be obtained from its use. evestment Alliance has not made any independent attempt to confirm the accuracy of the data used in the preparation of this publication. Past performance is not an indication of future performance. 6