Strategic Insight, a business intelligence provider to the global asset management industry, said net inflows into bond funds in the first half of 2012 were $350bn (£222bn, €283bn).
The company said investment exposure is changing most visibly in Europe where investors are migrating to high yield, emerging market and global debt – sectors which are now capturing two-thirds of bond fund inflows and account for 37% of bond fund assets in Europe compared with 20% in 2004.
“Investment companies are encouraging diversified sources of income with increasingly flexible approaches, and more specialized bond strategies,” said Jag Alexeyev, head of global research at Strategic Insight.
Alexeyev said these include a whole range of fixed income opportunities, such as corporate debt, local currency, short-duration high yield, emerging Asia and renminbi products as well as more specialised strategies like long/short and alternative credit, socially responsible income and target date bond structures.
Over the past three years, more than eighty actively-managed bond funds in Europe attracted at least €1bn of net inflows, said Strategic, with the funds serving as “flagship” products for more than forty companies. Together, these income funds collected $335bn (€230bn) of combined inflows since early 2009.
Strategic Insight said the perception of bonds as “safer” income-producing investments remain supported when compared with their equity counterparts which have remained volatile for a sustained period.
Meanwhile, equity funds in Europe had negative returns in eight out of the 12 months ending in May, a ratio not seen since the 2008-2009 financial crisis. Although equity funds recorded net redemptions lately in aggregate, several individual products attracted high cash inflows during the past two quarters, particularly with global, Asia, emerging market, and dividend equity themes.
Strategic Insight said inflows into long term funds, including equity, exceeded $730bn over the past three years in Europe, while globally long term funds saw net inflows in the first half of 2012 of $400bn.
