Feng said global funds received net inflows of US$1.24 trillion in 2023.(Photo by Low Yen Yeing/EdgeProp.my)

This article first appeared in Wealth, The Edge Malaysia Weekly on March 25, 2024 - March 31, 2024

The global fund industry experienced a harvest year in 2023, said Xav Feng at the LSEG Lipper Fund Awards 2024, which was held on March 8 at the Mandarin Oriental Hotel in Kuala Lumpur. Feng, LSEG Lipper Asia Pacific head of research, pointed out that global funds received net inflows of US$1.24 trillion (RM5.81 trillion).

For comparison, the industry saw net outflows of US$2.79 trillion in 2022.

He added that the net inflows last year could be attributed to several factors, including the outperformance of the US equity market on the back of excitement over artificial intelligence, cooling of global inflation and expectation of interest rate cuts by the US Federal Reserve.

Despite the rally in the S&P 500 led by large-cap technology stocks, however, equity funds experienced net outflows of US$102 billion last year.

Other funds that saw net outflows were commodity (US$14 billion), alternatives (US$61 billion) and mixed assets (US$251 billion).

Funds that received the highest number of net inflows were money markets at US$1,240 billion and bonds at US$418 billion, followed by real estate (US$4 billion) and others (US$2 billion).

Charts by LSEG Lipper

Breaking down into different sectors, money market USD received the most inflows from investors at US$1,015 billion. The rest were bond USD medium term (US$130 billion), money market EUR (US$113 billion), money market CNY (US$86 billion) and bond USD government (US$82 billion).

Sectors that experienced the most outflows were bond USD short term at US$75 billion and money market GBP at US$50 billion. They were followed by equity US small and mid-cap (US$46 billion), equity US income (US$44 billion) and mixed asset BRL flexible (US$38 billion).

Feng pointed out that the landscape looked rather different in Malaysia versus globally.

While money market received the highest net inflows globally, real estate was the most famous investment asset class locally last year, having received inflows of US$344.4 million.

Following that were equity (US$182.01 million), bonds (US$180.07 million), money markets (US$23.52 million) and others (US$17.1 million).

Charts by LSEG Lipper

Meanwhile, alternative assets, commodity and mixed assets funds experienced outflows of US$35.31 million, US$7.54 million and US$7.46 million respectively.

Breaking down into sectors, real estate Asia was the most favoured sector by local investors, as it received US$380.4 million inflows. That was followed by bonds (US$258.8 million), equity Malaysia (US$241.3 million), equity Asia Pacific (US$121.9 million) and mixed assets MYR balanced Malaysia (US$105 million).

On the other hand, investors pulled most of their funds from equity global, with net outflows of US$247.3 million. That was followed by bond Asia-Pacific (US$136.2 million), mixed asset MYR balanced-global (US$128.1 million), absolute return USD high (US$113 million) and target maturity (US$67.7 million).

Chart by LSEG Lipper

Before ending his presentation, Feng explained that the LSEG Lipper Fund Awards looked at the consistent return (or effective return) value of each fund to determine the winners.

He added that each fund house needed to have at least three distinct portfolios in one of the three asset classes to be eligible for the group awards, be it equities, bonds or mixed assets.

A total of 89 individual awards and seven group awards were awarded to 18 fund houses at the LSEG Lipper Fund Awards 2024.