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DGFs see another quarter of growth, says CAMRADATA

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Diversified Growth Funds (DGF) recorded another quarter of positive performance in Q2 2019 as DGF products continue to recover from a tough end to 2018, according to a new report from CAMRADATA which draws on data from over 90 products on CAMRADATA Live, the company’s online manager research platform.

This positive performance means that over the last year to 30 June 2019 the DGF universe has achieved a median return of 3.20 per cent.
 
However, despite this positive performance, investors were again reluctant to commit new money flows to the DGF segment. The sector experienced net outflows of GBP5.84 billion over the period, the seventh consecutive quarter in which the universe has seen net redemptions. Against this background of net disinvestment, DGF assets under management are now GBP23.2 billion below the peak seen at the end of 2017.
 
Sean Thompson, Managing Director, CAMRADATA, says: “These are difficult times for managers of DGF funds. Investor appetite seems to have waned and managers of these funds might be asking themselves what more they can do to encourage positive flows into this asset class.
 
“After the longest bull run in history, the outlook for the global economy looks increasingly uncertain, with some commentators pointing to yield curve inversion in US government bond markets as a harbinger of darker economic times ahead.
 
“DGFs earned a good reputation for successful navigation through the Global Financial Crisis of 2008-9, so it will be interesting to see if worsening economic conditions encourages investors to switch their attention back to these funds.”
 
According to the report, over the last quarter the DGF universe has seen GBP5.84 billion in net outflows, marking the seventh consecutive quarter in which the universe has experienced net outflows.
 
Since Q1 2019 DGF assets under management decreased by GBP2.80 billion, marking the third consecutive quarter that assets under management in the universe have fallen.
 
LGT Capital Partners achieved the largest asset inflows with GBP406m in Q2 2019. DWS were just behind, achieving net inflows of GBP390m, followed by HSBC Global Asset Management, Threadneedle Asset Management and Baillie Gifford & Co.
 
Thompson says, “This report has detailed analysis and commentary for diversified growth funds for Q2 2019, which is essential reading for investors looking to keep abreast of what is happening in this asset class.
 
“CAMRADATA Live monitors the strategies of asset managers, keeping investors up to date on what’s happening across hundreds of asset classes and helping them make more informed investment decisions.”

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