According to new data from global funds network Calastone, net inflows into managed funds reached $8.6 billion between January and May – a twentyfold jump from just $380 million over the same period in 2024.
Calastone said the surge reflects a sharp pivot in investor sentiment, initially buoyed by US President Donald Trump’s return to the White House in January. That optimism, however, quickly faded in February as central banks signalled a firmer stance on interest rates and cracks emerged in the US economy.
The resulting shift in sentiment triggered broad-based profit-taking in equities and drove bond yields higher, creating headwinds for many fund categories – especially equity funds, which experienced the most pronounced swings.
Australian domiciled equity funds shed $800 million in February alone, before rebounding with three consecutive months of net inflows, resulting in a year-to-date net gain of $1.25 billion – a stark reversal from the $3.1 billion in net outflows over the same period in 2024.
Multi-asset funds followed a similar path, posting a $180 million outflow in February, but recovering to log $1 billion in net inflows YTD, up from $1.65 billion in net redemptions the year prior.
Bond funds were more muted, with high subscription volumes in March offset by an equal pace of redemptions – reflecting investor hesitation ahead of Trump’s “Liberation Day” tariffs and April’s ensuing volatility.
Yet, April marked a clear inflection point. While Asian investors turned risk-off in response to trade policy shocks, Australian investors added $3.15 billion across all managed fund classes, making it the strongest month for net allocations since July 2024, when dovish central bank rhetoric lifted fixed income flows.
Marsha Lee, head of Australia and New Zealand at Calastone, noted Australia’s relative insulation from Trump’s sweeping tariffs, as April’s net inflows rivalled record highs.
“The notable drop in investment during February was largely equities-led as uncertainty brewed and US exceptionalism faded,” Lee said. “Demand for bonds also remained quite soft as central banks delayed rate cuts, sending yields higher.”
Lee added that investors have been “duly rewarded” for leaning into volatility as bond and equity markets normalised.
“Australian investors appear to be cautiously rotating back into equities while scaling down their reliance on bonds – a stark contrast to the flight-to-safety we saw throughout 2024,” she said.
According to Lee, this has likely driven a strong comeback for multi-asset funds which “appear to be regaining their footing after extended and unusual periods of high correlation between bonds and stocks due to post-COVID stimulus and low rates”.
“With bond yields normalising, offering diversification benefits, we could see 60/40 funds re-emerge from the wilderness,” Lee added.
