Aviva data quantifies investor preference for cash in market downturn.
Aviva Australia has released data illustrating the magnitude of investors' flight to cash during the market downturn in the final six months of 2008.
The data showed five of the top 10 funds as measured through net inflows for the year ended December 31, 2008 were either cash funds or term deposits.
In addition, such was the volume of the preference for cash investments in the back half of last year, term deposits accounted for 28 per cent of the total gross inflows into the Aviva platform Navigator in the December quarter of 2008.
"The increase has been staggering in comparison to previous years," Aviva distribution development manager Stuart Fechner said.
"When the government's guarantee on bank deposits was implemented it acted like a tail-wind, supporting the investor flight to safety," he said.
The second half of 2008 provided a stark contrast to the first half, where eight of the top 10 funds for new inflows on the Aviva platform invested in equities or were mortgage trusts. During this period only one of the top 10 funds offered investments in cash and one other was a term deposit.
Despite the resounding preference for cash, the figures revealed a few equity funds still managed to provide consistent cash flows over the 12 months to December 2008. Specifically, the Ausbil Australian Equity Fund and the Fidelity Australian Equities Fund were among investors' favoured offerings.
At the other end of the spectrum the Platinum International Fund, the Perpetual Wholesale Industrial Fund and the Challenger Howard Wholesale Mortgage Fund were the leading three products in relation to redemptions.
In Part 2 of our exclusive series, we ask leading names to nominate their best investments, the most effective industry group and the importance of platforms.
