FOR IMMEDIATE RELEASE

Daniel Enskat, Head of Global Consulting, Senior Managing Director

+1 212 217 6859, daniel@sionline.com   

2011 GLOBAL MUTUAL FUND FLOWS DECREASE BY 80% TO $200 BILLION BUT THE 1% OF TOP PRODUCTS COLLECT $1 TRILLION IN NEW CASH; US AND ASIA WITH NET INFLOWS, EUROPE IN REDEMPTIONS

New York, Hong Kong and London – February 27, 2011 – Net cash contributions to long-term mutual funds around the world came in at around $200 billion for 2011, down from almost $1 trillion in both 2010 and 2009, according to a forthcoming research report by Strategic Insight, entitled “the State of the Global Mutual Fund Industry”.  Net inflows in the US, Asia, and Latin America stood in contrast to outflows from Europe.

“Despite the aggregate industry flow compression, the top 1% of products in the industry were able to pull in $1 trillion in net new money last year, virtually unchanged from prior years – a continuation of the ‘winner takes all’ and blockbuster phenomena the industry has seen of late”, stated Daniel Enskat, Head of Global Consulting for Strategic Insight and author of the report.

Said Enskat: “Notably, the 1% of blockbuster managers and products included small and large firms, different global regions and a variety of investment themes.  The common denominator for all of them was the right mix of investment performance, client service, a strong brand and organizational stability”.

“Strategic Insight since 2008 has conducted over one thousand interviews with global asset holders around their key selection criteria and manager preferences. The second volume of Strategic Insight’s State of the Industry report (SOTI) focuses on winning strategies, leading firms and standout campaigns that enabled those blockbuster firms to sustain cash flows in the second half of 2011, at a time when the industry globally was impacted by the next act of the European debt crisis, market volatility (in August), regulatory uncertainty, limited net retail contributions and macro-political stumbling blocks.”

A few of the key themes and data points discussed in the report:

• An equity centric global fund industry refocuses in 2012: While fixed income has dominated flow statistics in recent years, the fund industry from an asset perspective evolves around equities. Globally, 42% of the over $30 trillion in total assets are held in equity funds, with another 9% in mixed products, bringing the total for equity/mixed funds to 51% of all global fund assets.

• The industry is moving towards investment solutions and ‘bridges’: “Themes and simplicity still dominate the product landscape, but institutions and distributors around the world are gradually shifting towards ‘bridge’ products, leading towards investment solutions and absolute return themes, albeit with geographical nuances. The various forms of investment solutions and wrappers – among them lifecycle, multi-manager, fund-of-funds, multi-asset, and other wrappers – overall are approaching $4 trillion in assets, with $110 billion in 2011 cash flows,” notes Enskat.  The top three funds were all US-based global asset allocation products (PIMCO All Asset, First Eagle Global, and Permanent Portfolio), with each over $5 billion in 2011 cash flows.

• Alternatives on the rise: After a move back to basics after 2008, alternative and absolute return products have accelerated exponentially since then, now approaching 7.5% of global fund assets. Alternative funds in 2011 combined gathered $100 billion in net cash flows, with top funds Standard Life Global Absolute Return Strategies ($3.7 billion), Newton Real Return ($3.5 billion), Van Eck Market Vector Gold Miners ETF & ZKB Gold ETF ($3 billion each), iShares Gold Trust ($2.8 billion).

• “From a flow perspective, three meta-trends – future asset class/investment category demand, regional flow potential (developed vs. emerging) and concentration of leadership via selected blockbuster products – will be part of the conceptual framework for fund managers as they are mapping out brand positioning and growth strategies for the coming years,” added Enskat.

• The best selling investment categories in 2011 were global bond ($63 billion), US short-term bond funds ($61 billion), international/global equities ($57 billion), US corporate fixed income ($39 billion), and real estate ($30 billion).  And among the top five 2012 focus areas for institutions and global distributors based on proprietary Strategic Insight survey work are investment solutions, absolute return, client service, thought leadership and better digital information delivery.

• The Winner-Takes-All:  2011 sharply delineated outcomes for fund managers. Blockbuster cash flow firms demonstrated thought leadership, tailored information delivery, simplicity in product positioning and clarity of investment process, and the top 1% of products combined took in almost $1 trillion in new money.  Among the top global cash flow blockbusters in 2011: Vanguard Total International Stock Index, Templeton Global Bond, iShares DAX, Double Line Total Return, and DaiwaSB Short-Term AU Bond.

For more information on this report, please visit: www.strategicinsightglobal.com 

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Strategic Insight, founded in 1986, is a leading research firm for the mutual fund and wealth management industry, providing clients with in-depth studies, consultation, and electronic decision support systems. Strategic Insight assists more than 250 firms worldwide, including the largest U.S. mutual fund companies. Visit us at www.SIonline.com. SI’s parent, Asset International, is a privately held provider of information and technology to global pension funds, asset managers, financial advisers, banking service providers, and other financial institutions in the private and public sector. The company has offices in New York, Hong Kong, London, Melbourne and Stamford, CT. For additional information, visit www.AssetInternational.com.