Managed fund inflows across all asset classes rose 162 per cent to $35.7 billion last year according to Calastone, up from $13.6 billion in both 2019 and 2020.
Equity funds recorded the biggest increase in inflows according to the firm, with a rise of 174 per cent from $5.5 billion in 2020 to $15.0 billion in 2021, nearly eight times as high as 2019.
“Australians have saved in record amounts during the pandemic, stowing away a seventh of their disposable income in 2020-21, almost three times more than in 2019,” said Calastone head of APAC Ross Fox.
“They were rather cautious with all this cash in the first year of the pandemic. But by 2021, as a clearer exit route emerged in the form of vaccines, fund flows responded dramatically.”
Calastone found that nearly two-thirds of Australian equity fund purchases equivalent to $9.6 billion took place in the second half of the year.
However, net inflows continued to fall throughout the second half from a peak of $3.1 billion in July to $1.0 billion in December.
“The loss of appetite for risk by the end of the year reflects the national sigh of resignation as Omicron reached Australia’s shores,” said Mr Fox.
“But this was no rout. December’s equity inflows were just a third of the peak in July, but they remained above the average for the last three years.”
A record Q3 accounted for more than two-fifths of inflows across all asset classes for the year, while Q4 was also the second-best quarter for Australian fund flows recorded by Calastone.
The firm said that 95 per cent of Australian managed fund flows passed through its network each month.
Two-thirds of purchases during the year equivalent to $8.3 billion were in equity funds with a focus on overseas markets compared to just over half in 2020.
A rise of 186 per cent was recorded for overseas-focused funds compared to 126 per cent for those with a domestic focus.
Net inflows for fixed income funds reached $10.5 billion versus $4.3 billion in 2020 while inflows for real estate funds during the year rose by a quarter to $1.9 billion.
“The flood of capital into managed funds in 2021 is a direct consequence of both higher risk appetite and piles of ready cash on household balance sheets,” Mr Fox said.
“They are not alone. Investors around the world have behaved in a similar way.”
