The use of safe-haven assets such as cash and global fixed interest through 2011 suggests that there is a 'wall of money' waiting to switch into equity funds as confidence returns, says Skandia International.
The use of safe-haven assets such as cash and global fixed interest through 2011 suggests that there is a ‘wall of money’ waiting to switch into equity funds as confidence returns, says Skandia International.
Cash and global fixed interest funds accounted for half of all money invested into Skandia International’s investment products on a global basis during 2011, analysis shows.
For those investors who chose to place their money in these two sectors, this decision may have paid off as the average performance of these asset classes remained positive last year, unlike any other asset class in the analysis.
These figures show a significant proportion of savings currently sitting in cash and fixed interest whilst investors wait for the ‘right’ signals from the markets in order to move into equities, or other asset classes, and participate in the rally when it happens, Skandia International said.
In third and fourth positions of popularity during 2011 were Pacific equity and commodity funds respectively, which attracted 25% of investors’ money, whilst Japanese equities accounted for the smallest proportion of inflows, taking in a mere 0.09% of total net flows.
In terms of investment returns, the next best performing funds behind cash and fixed interest were North American equity funds, although still falling by over 4%, followed by property funds, which dropped by over 8%.
The worst performers with a loss of almost 31% were emerging Europe funds which suffered to the greatest extent as a result of the eurozone debt crisis.
Looking at withdrawals, mixed asset funds proved to be the least attractive last year, with almost a third of investors choosing to move their savings out of these funds. Almost 13% exited aggressive/global equity funds, a decision which may have been influenced by the performance of global indices such as the MSCI World Index, which lost almost 7% in dollar terms last year.
A further quarter of the money removed was from Latin America, Hong Kong & China and BRIC funds – not surprising, given that the average fund in these three sectors lost in excess of 20%; they also proved to be the most volatile sectors for investments last year. Perhaps the most disappointing investment last year was India, which saw both very high volatility and some of the worst investment returns.