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Fund Flows: Flows reversal but momentum remains intact at the moment [19 Dec 11] December 19, 2011
It is always interesting to know what your fellow investors are investing into. While not suitable as a decision making tool, we shed some light on what Asian Investors are doing with their investments.
Author : iFAST


Untitled Document

Key Points

  • Revised estimate for 9 Dec 2011 saw minor improvements while overall fund flows attribution remains largely unchanged
  • Preliminary estimate for 16 Dec 2011 saw a reversal, following 3 weeks of bullish inflows
  • Asian investors probably took profit and withdrew from equity funds, choosing to favor short duration and money market funds instead
  • Weekly fund flows is very volatile but fund flow momentum (a smoothed fund flow indicator) continue to suggest positive momentum for equity funds
  • Asia equity, while lower than 2010’s level, continues to see fastest pace of improvement
  • With slightly more than 1 week till the New Year, the year-end rally is less likely to materialise
  • However, we remain optimistic that the rally all investors are keenly awaiting is more likely late rather than absent

Revised fund flows data for the week ended 9 December 2011 saw minor improvements for both Balanced and Alternative Investments, as outflows were lower than initially estimated. However, overall attribution was largely unchanged with overall net inflow supported by strong demand for both fixed income and equity funds.

While we have highlighted continued outflow from short duration and money market funds last week, fund flows data for the week ended 16 December 2011 saw outflow halting (see chart 1). Unlike the bullish sentiments we have been observing over the past few weeks, last week’s fund flow saw a reversal as investors probably took profits as they withdrew from equity funds and favored short duration and money market funds instead.

Chart 1
 

At this point in time, it is still rather hard to determine if sentiments are once again heading for a downturn. As fund flows are very volatile on a weekly basis, looking at weekly flows may provide a myopic view. Looking at the equity fund flow momentum indicator (a smoothed measurement of investors behavior by taking a moving 12-weeks moving average of flows), investor behavior over the recent months still suggests upward momentum with no signs of peaking as of week ended 16 December 2011. Asia equity fund flows continue to see the fastest pace of improvement, though current levels are lower than that observed at the start of 2010 when the indicator was first compiled.

Chart 2

At iFAST, we strive to help our clients invest globally and profitably. To better achieve this, the speed, as well as channels of information flow is very important. We aim to provide you with timely updates on market happenings in addition to our usual content. Our mobile application “Download the all new FSM Mobile App!” allows you to access market information and commentary on the go.

In addition to that, we also encourage that you leverage on our existing forum to share your views as well as feedback with us as well as our investor community.

If you wish to find out more about what happened across global equity markets last week, please refer to our weekly commentary and market valuations data below:

If you wish to find out more about what happened across fixed income markets last week, please refer to our weekly commentary below:


iFAST and/or its licensed financial adviser representatives may own or have positions in the funds of any of the asset management firms or fund houses mentioned or referred to in the article, or any unit trusts or Singapore Government Securities bonds related thereto, and may from time to time add or dispose of, or may be materially interested in any such unit trusts or Singapore Government Securities bonds. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website. If you have any queries about the above contents, please contact iFAST.