It’s official: 2015 was a tough year for fund managers around the world, the year-end data from Morningstar reveals.
According to a Morningstar report published today, global asset inflows fell by a third over the 12 months to the end of December, when compared with the previous year’s levels.
At US$949bn, total flows for mutual funds and exchange traded products in 2015 were lower by US$451bn on the previous year’s US$1.4trn total.
Worst hit was the US fund industry, which saw its new asset flows drop by more than half – to US$263bn, from US$580bn in 2014.
Asia showed the strongest organic growth rate among the regions, with asset flows growing by 18.6%, according to Morningstar.
In terms of fund categories, alternative funds enjoyed a second year of double-digit organic growth, the highest rate among global category groups, bolstered by investors seeking options to diversify and provide consistent returns in an environment of uncertainty for both equity and fixed income.
Alina Lamy, senior markets analyst for Morningstar, said that the dramatic drop in inflows last year reflected the “growing uncertainty for markets worldwide in 2015, fuelled by changes in monetary policies in the United States and Europe, slowing economic growth around the world, and slumping commodity prices, especially oil”.
“Accordingly, inflows were lower in 2015 than 2014, and total assets decreased as global markets posted negative returns,” said Lamy.
“Whereas US-domiciled funds attracted the largest flows in 2014, we saw smaller and more evenly distributed flows across regions in 2015.”
Equity funds strongest
Equity funds led the Morningstar major category groups globally in terms of annual inflows, although 2015’s intake, of US$305bn, was also significantly smaller than the US$476bn these funds collected in 2014.
Allocation funds gathered US$171bn, ahead of inflows of US$132bn for fixed-income funds, making them the global category group with the second-largest inflows.
Vanguard maintained its position as the fund industry’s biggest hitting player, sustained, according to Morningstar, by “the growing popularity of index strategies”.
“The majority of the firm’s US$251bn inflow went to its passive funds, but its active funds also gathered inflows of US$15bn,” added Lamy.
Among active fund providers, Fidelity and JP Morgan saw the greatest inflows last year, collecting US$57bn and US$23bn, respectively.
For all the major regions studied by Morningstar, the percentage of passive assets in equity funds was larger than the percentage of passive assets in fixed-income funds, and the United States had the highest percentage of passive assets of all regions.
According to Morningstar, nowhere was the divide between active and passive as wide as in the United States, where the majority active funds suffered outflows in 2015 and passive funds attracted inflows of approximately US$400bn.
The Morningstar Global Asset Flows Report – Morningstar’s fourth such study – is based on assets reported by more than 3,800 fund groups across 82 domiciles. The report represents more than 92,000 fund portfolios encompassing more than 220,000 share classes and includes a global overview and four region-specific sections: United States, Europe, Australia, and Latin America. Morningstar estimates net flow for mutual funds by computing the change in assets not explained by the performance of the fund and net flow for ETPs by computing the change in shares outstanding.
To view a copy of the Morningstar report, click here.