Commodity funds took biggest hit in July
Global assets under management did not move significantly in July and stood at $35.9trn (€32.5trn) at the end of the month, the latest Lipper report has revealed.
Estimated net inflows amounted to $114.9bn (€104.6bn), while market movements in the reporting month delivered an $86.7bn (€78.7bn) loss. In terms of market share, the trend continues to favour equity funds (+0.2 %) over bond funds (-0.2%) and money market funds (+0.1%).
All asset types posted negative average returns, with commodity funds taking the biggest hit (-8.7 %) due to a further drop in energy prices after settling the Iran deal and a significant decline in precious metal prices. A further depreciating euro versus US Dollar (-0.8%) had an additional impact on Lipper’s USD calculated fund market statistics.
Regardless of negative average returns, nearly all asset types except bond and commodity funds could profit from net inflows. Leading the way was Money Market Funds with $77.7bn (€70.4bn) inflows, indicating some money being put aside because of uncertain market outlook, followed by equity funds with $29.5bn (€26.7bn).
Bond funds lost $0.6bn (€0.5bn) and commodity funds some $1.7bn (€1.5bn), due to outflows.
Apart from the two big Money Market Classifications US Dollar (€37bn) and Euro (€26.7bn), the Equity Global ex US (€15.4bn), Equity Japan (€8.5bn), and Equity Europe funds with €6.4bn estimated net inflows were able to attract the greatest interest from investors.
As was the case in June, the Equity US fund classification had to accept redemptions, this time amounting to $7.3bn (€6.7bn) which marked this the worst classification for fund flows in the top 50 Lipper Global Classifications league.
The outlook for the securities market does not give a clear indication where it is heading. On the one hand it is anticipated that the FED will raise interest rates this year but, on the other, this seems unlikely as US macroeconomic data shows little signs of significant improvement.
Cheap money (from borrowing at low rates) isn’t finding its way into the real economy, as investors prefer to stay on the sidelines, accepting lower interest rates for less risk in fixed income markets.
The situation is not much different in Europe. It doesn’t look like the ECB will raise interest rates any time soon, due to highly-indebted southern European countries. For Europe as a whole, the money continues to flow into Equity markets, with notable movement into Money Markets as well.