'Wall of cash' flowing into fixed income

'Wall of cash' flowing into fixed income

Fixed income funds are enjoying something of a "renaissance", with total net flows for the 12 months to September 2015 amounting to $6.2 billion, says Tria Investment Partners.


In an article on fixed income, industry consultant Tria Investment Partners said the asset class has long been considered the "poor cousin" of equity, property and multi-asset funds by Australian investors.

The low-take up has largely been down to the low margins of fixed income products – as well as a "generally low understanding of how fixed income works", said Tria.

In the 12 months to September 2015, fixed income funds saw surprisingly diverse inflows of $6.2 billion, said Tria.

"Diversified fixed income funds – the industry’s one-stop-shop solution for fixed interest, took $1.7 billion over the year, and the ‘building blocks’ that make up a DFI strategy, Aussie and global fixed interest funds, took a further $1.9 billion," said Tria.

"Absolute return fixed income funds, which make up around 5 per cent of the funds under management, experienced enormous netflows of $1 billion."

Almost every subsector is in "new inflow" at the moment, noted Tria.

"There is such a wall of cash flowing into fixed income funds that the rising tide is lifting all boats (if not equally)," it said.

Financial advisers may not be talking about fixed income in the same way as they talk about equities, said Tria – but "the data shows fixed income is continuing to receive healthy net inflows, and more than any other single asset class."

There are also strong flows into more expensive fixed income products, said Tria.

"For fixed income teams, who may have felt undervalued compared to their equity counterparts for some time, perhaps the tables have turned as the rest of the market finally appreciates the value they can bring to client portfolios."

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'Wall of cash' flowing into fixed income
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