Investors turn to defensive stocks as confidence slumps
The search for safety amid global market downturns has hailed the return to more conservative asset classes, according to EPFR Global Fund Flows and Allocations Data.
A possible Greek default and multiple sovereign downgrades, including the US and declining global growth, also created an uncertain climate for fixed income investors during the third quarter.
The data revealed that the final week of September saw EPFR global-tracked US bonds funds, utilities sector funds and municipal bond funds post increased levels of inflow, according to EPFR.
Any fund group associated with Europe also saw heightened levels of outflow, with Europe bond funds posting outflows 11 out of the past 13 weeks, the data stated.
Emerging market bond funds continued to attract investors despite a break in inflows in early August. Emerging Asia was a clear front-runner in terms of regional preference and local currency mandates, but the last week of September saw a record outflow of $3.19 billion from the emerging market bonds sector, the data found.
Meanwhile, October saw municipal bond funds and mortgage backed bond funds attract steady inflows, while funds specialising in dividend paying stocks absorbed nearly $6 billion during a period when investors pulled out over $100 billion from equity funds as a whole, the data revealed.
According to EPFR, utilities sector funds extended their current inflow streak to seven consecutive weeks going into October, and commodities sector funds benefited from additional flows into funds specialising in gold and precious metals.
AUTHOR
Andrew Tsanadis
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
