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Investors seek safety in fixed income, but there are opportunities in other segments
July 2020, Singapore—Demand for fixed-income products, especially global and Asian fixed income, is expected to continue to hold up in most markets this year due to the uncertainty brought by the coronavirus outbreak. However, opportunities are present in other product segments.
The first quarter of 2020 saw heavy losses in the assets of most Asian markets, many of which fell by more than 10% amid the surge in COVID-19 cases globally and the drop in oil price. China and Korea, however, bucked the overall trend and grew 12.1% and 1.4%, respectively. Despite all markets experiencing market depreciation, China’s growth alone more than offset the decline in assets of other Asian markets, with net new inflows of US$266.4 billion.
As most global market indices declined by more than 20% in the first quarter, equity funds’ marketshare shrank from 23.7% in 2019 to 20.0% in March 2020. Meanwhile, bond and money market funds’ marketshare increased by 1.0 and 3.7 percentage points, respectively, as investors sought safety in such funds.
Cerulli’s research has uncovered other interesting trends in the first quarter of 2020:
"Investors’ shifting risk appetites and product preferences need to be kept in mind amid the coronavirus outbreak,” said Ken Yap, managing director, Asia, with Cerulli Associates. “Managers in our survey have ranked regular income and capital protection as the most important product features sought by retail investors, while distributors have rated products with limited volatility at the top. Ultimately, though, consistent fund performance will be essential for managers to retain investor confidence.”
NOTES TO EDITORS:
These findings and more are from The Cerulli Edge—Asia-Pacific Edition, 3Q 2020 issue.
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