According to Equity Trustees, this was followed by 18 new Australian equity funds, 16 alternative funds and 13 funds each in global equities, domestic real assets and Australian fixed income funds (13 of each).
With Equity Trustees bringing just 10 global fixed income products to market in 2022, the firm attributed the category’s recent popularity to rising interest rates offering superior returns and sustained investor interest in exchange-traded funds (ETFs).
Namely, the rapid surge in global interest rates in 2022 and 2023 heightened market volatility and unsettled traditional investments in shares and bonds. In response, investors have increasingly gravitated towards fixed income ETFs.
Looking more closely at the asset class, Johnny Francis, Equity Trustees general manager for fund services, highlighted that private credit and debt funds launches, in particular, have been on an upswing.
“There was an increase in private credit and debt funds with several of these feeding into unregistered wholesale funds,” Francis said.
“Investors have recognised that non-bank lenders and their private credit funds can provide a source of income. The major traditional banks have reduced their overall lending and these newer fund managers have stepped in to fill the gap and are being welcomed by investors.
“This is seeing more fund managers, both from here and overseas, offer these structures. We are seeing increased interest from offshore fund managers, in particular those from North America keen to access the Australian market.”
However, it was global equities that attracted the most investor dollars, according to Equity Trustees.
Namely, international equities saw year-on-year fund flows approach $40 billion in April 2024, while global fixed income saw some $14 billion.
Francis explained that an important factor behind the increase in flows into global assets is largely being driven by Australia’s compulsory investment into superannuation.
“As the superannuation industry continues its trajectory to outgrow the total GDP of Australia, these funds must be deployed, hence asset managers and investment managers are increasingly allocating funds to products with global exposure” he said.
Francis added that, when it comes to investment approach, the major focus of new funds was income and capital protection, followed by the growth and value factor thematics.
Looking ahead
Equity Trustees projects that the next wave of funds will focus on alternatives, private credit, and private debt, particularly targeting private wealth groups.
Alternatives surged from seven launches in 2023 to 16 in 2024, with expectations for further increases.
“We also expect the continued rise of ETFs which is an easily accessible product for investors and self-managed super funds,” Francis said.
He also observed a shift in the marketing and distribution strategies of foreign fund managers in Australia, stating: “While some fund managers apply a fly-in fly out marketing strategy or partner with third-party specialists, the ideal model is having a local presence in the long term, as this is more successful with a local distribution team selling products.
“Institutional investors and asset allocators want to meet with key investment decisionmakers of the portfolio,” he said.
