US bond fund managers were at the epicentre of dramatic institutional investor redemptions in fixed income in the first quarter of 2020, according to new research from investment management platform eVestment.
US bond fund managers were at the epicentre of dramatic institutional investor redemptions in fixed income in the first quarter of 2020, according to new research from investment management platform eVestment.
Examining data from USD28.3 trillion in institutional assets under management on eVestment’s platform, the report showed US bond funds suffering outflows of USD162.6 billion, of which USD111.3 billion came from active strategies and USD51.3 billion from passive strategies.
When the coronavirus pandemic hit in the first quarter, investors began fleeing both traditionally-safe sovereign and riskier corporate bonds, and instead rushing to hold cash.
“Cash management strategies were big winners in institutional investment flow, gaining USD332 billion during the quarter,” notes eVestment’s global head of research, Peter Laurelli.
Non-US fixed income strategies fared slightly better, losing only USD60.8 billion from active strategies and USD47.9 billion from passive strategies during the quarter.
“Global multi-sector fixed income, global unconstrained bond, and passive Europe fixed income each saw institutional outflows of greater than USD10.0 billion. At the other end of the spectrum, credit-oriented European debt strategies were one of the few fixed income segments with institutional allocations during the quarter,” says Laurelli.
Overall, the report found that net institutional flows totalled USD59.9 billion in the most recent quarter, and -USD117.7 billion over the last four quarters.
The report also examined equities funds. eVestment found that while investors continued withdrawals from active equities strategies in the first quarter of 2020, with USD51.0 billion coming out of US and USD29.9 billion from non-US managers, passive equity strategies flourished.
Fresh allocations to passive equity strategies reached USD110.6 billion in Q1 2020, including USD49.4 billion to US strategies.
“Institutional investors allocated +USD49.4 billion to passive US equity and +USD61.2 billion to passive non-US equity strategies in Q1, marking the largest combined inflow quarter since at least 2005,” comments Laurelli.
