March 2018

EDITORIAL: All aboard

Nick-FitzpatrickGulp! After the best year in funds history, market volatility returned in 2018 to potentially bring to an end a steam train ride that in 2017 delivered the highest fund flows on record.

Preliminary data for this year looks hopeful, with fund flows in January showing investor sentiment holding steady. Morningstar’s Ali Masarwah noted that in the first month of the year, investors had “picked up where they left off” in December. The evidence predominantly lay in the continued appetite for equities and emerging market bonds, while government bonds saw outflows.

Equity and bond investment patterns further reflected enthusiasm for emerging markets, a sure signal that sentiment remains risk-on. We look at the case for emerging markets this month, with some focus on local currency bonds.

But back to fund flows. Strong demand for active investments in January looked to be tailing off in preliminary data for February, Masarwah said. But let’s not be pessimistic. The fact that last year was described as “exceptional” (see Briefing, p6) ought to be the lasting thought.

Nick Fitzpatrick is group editor at Funds Europe

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