Australian equities survive bear market

Australian investors were negative on every category of equity fund in June, except Australia, according to Calastone’s latest quarterly Fund Flow Index.

Australian equities were a beacon of relative stability, according to analysis from the global funds network, with net inflows in June totalling $36 million, though this was around one tenth of the average monthly inflow over the last two years.

In managed accounts, the second quarter of 2022 saw outflows of $2.05 billion across all asset classes, the largest since at least 2019 when the index began.

Unlike investors in other parts of the world, Australians had also turned negative on property funds, withdrawing $169 million in the second quarter, the first negative quarterly reading since the index began.

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Calastone managing director of Australia and New Zealand, Teresa Walker, said signs of optimism was scarce as the global bear market shred investor sentiment.

“June was the first time we have seen investors withdraw capital from every equity category (except Australian) and every asset class,” she said.

“The relative resilience of Australian equities reflects the commodity and banking bias on the market. The Australian stock market is one of the highest yielding in the world and that has proven a big draw in times of rising inflation and interest rates.

“Nevertheless, even appetite for Australian equity funds waned substantially in May and June. As fears of a global recession have grown, equities everywhere have seen a further convulsion of risk aversion. Commodity prices have fallen sharply too and that takes the shine off the Australian market even for domestic investors.”