Thirst for Australian equities gradually on the rise

There are signs investors are gradually moving towards Australian equities this year, with the popularity of term deposits and cash funds waning, according to data from Aviva.

The company has released its review on the top funds for gross inflows, gross outflows and net inflows into its Navigator platform, noting a favourable shift in attitude towards equities compared to the second half of 2008.

“It’s no surprise to see such a strong level of support for cash-based products over the full financial year, but I do believe that we’ve now seen the peak,” said Stuart Fechner, distribution development manager — investment products at Aviva.

“There has been a gradual increasing trend towards investing in the Australian equity market as the current year has progressed. It’s not as yet overwhelming, but it’s there.”

According to the data, over the year ending June 2009, five out of the top 10 funds (gross and net inflows) were term deposits or cash funds, with cash funds sitting at just under 10 per cent of gross inflows and term deposits at 23 per cent.

Australian equity trusts represented in the top 10 were the Ausbil Australian Active Equity Fund, Fidelity Australian Equities Fund and the Colonial First State Wholesale Geared Share Fund, which Aviva said achieved a “good level” of net inflows over the year ending June 2009.

Data for the second quarter of 2009 showed gross inflows into term deposits sat at 16 per cent, a drop on the 23 per cent in the 2008-09 financial year.

Further, based on net inflows, only UBS’ Cash Fund was in the top five, compared to four cash funds occupying spaces in the top five in the 2008-09 financial year.

“Even investments that are directed to term deposits are now heading into three-month terms rather than 12-month terms. Investors are now less willing to lock in their money for too long and miss the opportunity to participate in any further equities rebound,” Fechner said.