HSBC Fund Managers Survey: Tracking Global Money Flows
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HSBC Fund Managers Survey: Tracking Global Money Flows

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    HSBC Fund Managers Survey: Tracking Global Money Flows HSBC Fund Managers Survey: Tracking Global Money Flows Presentation Transcript

    • HSBC Fund Managers Survey: Tracking Global Money Flows 9 March 2009 Bonnie Tse Head of Premier, Wealth Management and Mid-Market Segment, Personal Financial Services, Asia-Pacific 1
    • Survey objectives • To identify global liquidity flows • To understand the dynamics of allocation mix globally • To obtain fund managers’ views on the market • To obtain first-hand information instead of relying on time-lagged third- party fund flow data • To help customers understand the current investment environment from a global perspective 2
    • Survey methodology • HSBC’s partner fund managers, accounting for about 17.42 per cent of global funds under management (FUM)1, participated in this quarterly survey: AllianceBernstein, Allianz Global Investors, Baring Asset Management, Deutsche Asset Management, Fidelity Investment Management, Franklin Templeton Investments, HSBC Global Asset Management, Invesco Asset Management, Investec Asset Management, JF Asset Management, Schroders Investment Management and Société Générale • The survey analysed participating fund firms’ FUM breakdowns at the end of 3Q08 and 4Q082 • The survey also collected fund managers’ views for 1Q09, covering a number of asset classes and markets 1. Total global FUM at the end of 3Q08 was US$21.66 trillion (Investment Company Institute) 2. 4Q08 data as of 31 December 2008 3
    • Funds under management in 4Q08 • Total FUM of fund managers participating in the survey reached US$3.27 trillion at the end of 4Q08. Survey estimates a US$295 billion decrease in FUM in 4Q08, representing an 8.26% drop from 3Q08 FUM (US$bn), end of 3Q08 and 4Q08 +83.2 Total decrease: +4.5 US$294.9 billion 1,081.5 -252.0 937.2 941.7 954.5 829.5 871.3 -42.6 n -87.9 US $ b 337.5 341.5 298.9 249.6 3Q 4Q 3Q 4Q 3Q 4Q 3Q 4Q 3Q 4Q Equity funds Bond funds Balanced funds Money funds Other funds 4
    • Breakdown of funds under management 41 billion FUM breakdown by asset type in 3Q08 FUM breakdown by asset type in 4Q08 Other funds -USD273 billion Other funds 9% 10% Equity funds 25% Equity funds Money market 31% funds 23% Money market funds 29% Balanced Balanced Bond funds funds funds 29% 10% Bond funds 8% 26% Note: Figures may not add up to exactly 100 per cent due to rounding. 5
    • Estimate of contribution to FUM change by asset class • Equity funds contributed most to the FUM decrease during 4Q08 Equity Funds - US$252.0 billion ( 85%) Bond Funds + US$4.5 billion (-1.5%) Balanced Funds - US$87.9 billion (30%) Money Market Funds + US$83.2 billion (-28%) Other Funds - US$42.6 billion (14.5%) Note: Figures may not add up to exactly 100 per cent due to rounding. 6
    • HSBC Fund Flow Tracker – Equity Funds • Fund flows tracking market performance 150,000 150 50,000 MSCI % US$m 100 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 -50,000 -150,000 50 Quarterly money flow - Equity Funds (US$) MSCI World Free HSBC Fund Flow Tracker - Equity Funds (US$) Note: The HSBC Fund Flow Tracker represents cumulative dollar value of money flows by quarter as reported in the HSBC Fund Managers Survey 7
    • HSBC Fund Flow Tracker – Bond Funds • Fund flows demonstrating flight to quality, particularly to US dollar investment grade corporate bonds and European (inc. UK) bonds, and diversification strategy among investors 150,000 150 50,000 MSCI % US$m 100 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 -50,000 -150,000 50 Quarterly money flow - Bond Funds (US$) Barclay's Capital Global Bond Index HSBC Fund Flow Tracker - Bond Funds (US$) Note: The HSBC Fund Flow Tracker represents cumulative dollar value of money flows by quarter as reported in the HSBC Fund Managers Survey 8
    • Breakdown of funds by geography • US and Europe (inc. UK) were still the dominating regions in equity / bond investments in 4Q08 Regional equity funds Regional bond funds Global emerging markets High yield/emerging (ex -Emerging Asia ) 9% market bonds Asian bonds 3% Europe and 1% Asia-Pacific UK bonds 16% 9% (of which Greater China is 3.5%) North America 44% Japan ` 9% US bonds 87% Europe (inc. UK) 22% 9
    • Change in funds under management FUM growth/decline 3Q08 FUM growth/decline 4Q08 -18.3% Global equities -18.5% -6.8% North America equities -20.6% -22.6% Europe including UK equities -23.2% -21.1% Japan equities -12.1% -29.5% Asia-Pacific ex-Japan equities -24.0% -29.8% Greater China equities -15.1% -38.1% Emerging markets equities -36.8% -12.3% Global bonds 4.2% 5.6% US bonds 8.2% -12.7% Europe including UK bonds 11.0% -13.2% High yield / EM bonds -24.2% Equity funds Bond funds 10
    • Market performance in 3Q08 and 4Q08 Market performance in 3Q08 Market performance in 4Q08 -15.3% Global equities -21.8% -10.3% North America equities -23.3% -20.8% Europe including UK equities -22.8% -17.7% Japan equities -9.0% -24.0% Asia-Pacific ex-Japan equities -23.0% -25.2% Greater China equities -10.7% -27.0% Emerging markets equities -27.6% -3.4% Global bonds 6.4% -3.8% US bonds 5.3% -7.3% Europe including UK bonds 2.3% -7.0% High yield / EM bonds -12.3% Equity funds Bond funds Source: Bloomberg and Morningstar 11
    • Where did the money go? • Emerging markets equities and high yield/emerging markets bonds posted the highest outflows due to concerns that the recession in developed countries will impact emerging economies • Europe (inc. UK) bonds posted the highest inflows due to interest rate cuts by the European Central Bank (ECB) and the Bank of England (BOE) • US bonds and US equities posted inflows aided by economic recovery and government stimulus policies Estimate of net fund flow in 3Q08 Estimate of net fund flow in 4Q08 -3.0% Global equities 3.3% 3.6% North America equities 2.7% -1.8% Europe including UK equities -0.5% -3.5% Japan equities -3.0% -5.5% Asia-Pacific ex-Japan equities -1.0% -4.6% Greater China equities -4.4% -11.1% Emerging markets equities -9.2% -8.9% Global bonds -2.3% 9.4% US bonds 2.9% -5.4% Europe including UK bonds 8.7% -6.3% High yield / EM bonds -11.9% Equity funds Bond funds Source: HSBC Survey 12
    • 1Q09 asset allocation strategies by class • Due to weak economic data and continued uncertainty in stock markets, fund managers are more optimistic about bonds Asset class allocation strategy Underweight Neutral Overweight Equities 22% (30%) 44% (20%) 33% (50%) Bonds 0% (20% ) 43% (30%) 57%(50%) Cash 17% (13% ) 50% (63%) 33% (25%) Notes: • Figures in brackets indicate survey results from the previous quarter (4Q08). • Overweight: Refers to an investment position that is stronger than the generally accepted benchmark. It implies that one is more optimistic / bullish in outlook for that asset class • Underweight: Refers to an investment position that is weaker than the generally accepted benchmark. It implies that one is more pessimistic / bearish in outlook for that asset class • Neutral: Refers to an investment position that is equal to the generally accepted benchmark. It implies that one has no biased view on the outlook for that asset class • Figures may not add up to exactly 100 per cent due to rounding 13
    • 1Q09 asset allocation strategies by geography • Fund managers are turning bullish on Greater China equities as China’s stimulus policies are expected to support domestic demand and economic growth • The sentiment towards US equities improved from negative to neutral while views towards Asia-Pacific ex- Japan equities became less optimistic • Fund managers hold positive views on European bonds on expectation of further rate cuts by both the ECB and the BOE • Sentiment on US dollar investment grade bonds remains weak due to concerns that US treasury bonds have become overvalued with yields of US Treasuries down to historic lows Underweight Neutral Overweight Allocation strategy by geography 1Q09 4Q08 1Q09 4Q08 1Q09 4Q08 Equities North America 33% 50% 33% 20% 33% 30% Europe (incl. UK) 22% 50% 56% 30% 22% 20% Japan 33% 33% 56% 56% 11% 11% Asia-Pacific ex-Japan 22% 22% 33% 22% 44% 56% Emerging markets 38% 33% 25% 11% 38% 56% Greater China 0% 38% 33% 13% 67% 50% Bonds US Dollar 43% 56% 29% 33% 29% 11% European 0% 11% 50% 33% 50% 56% Global emerging markets/High yield 33% 33% 33% 11% 33% 56% Asian bond 17% 13% 50% 63% 33% 25% Note: Figures may not add up to exactly 100 per cent due to rounding 14
    • HSBC Fund Flow Tracker – Greater China Equity Funds • Stable fund flows support the positive view of fund managers 15,000 150 10,000 5,000 MSCI % US$m 0 100 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 -5,000 -10,000 -15,000 50 Quarterly money flow - Greater China (US$) MSCI China HSBC Fund Flow Tracker - Greater China (US$) Note: The HSBC Fund Flow Tracker represents cumulative dollar value of money flows by quarter as reported in the HSBC Fund Managers Survey 15
    • Survey highlights • Both equity and fixed income funds recorded outflows during 4Q08, though at lower proportions of FUM compared to 3Q08 • Among equity funds, North America equity funds saw an inflow of 2.7% of FUM, partly driven by the loosening policies of the US Federal Reserve and US government. Global emerging market equity funds continued to post the highest outflow at 9.2% of FUM due to concerns that the recession in developed markets could place emerging market equities at risk • Fund managers are more optimistic about bonds given weak economic data and uncertainty in stock markets • On equities: – Fund managers are turning bullish on Greater China equities, given expectations that China government stimulus policies will support domestic demand and economic growth – Sentiment on US equities improved from negative to neutral while the view on Asia-Pacific ex- Japan equities is less optimistic • On fixed income: – Fund managers hold positive views towards European bonds on expectations of further rate cuts by both the ECB and the BOE – Sentiment towards US dollar investment grade bonds remains weak due to concerns that US treasury bonds have become overvalued with yields of treasuries down to historic lows 16
    • Disclaimer The information obtained in the survey has been provided by third parties and the Bank has not independently verified such information. The Bank makes no guarantee, representation or warranty and accepts no responsibility or liability as to the accuracy or completeness of the information. The information or opinion expressed herein does not constitute an offer to sell and should not be construed to be a recommendation to buy or sell any securities, currencies, commodities or financial instruments referred to above. The Bank shall not be held liable for damages arising out of any person's reliance upon this information or for any opinion or conclusion that the reader may draw from the information. Source of information All graphs are derived from HSBC Fund Managers Survey except for the graph on market growth (slide 9), which was sourced from Bloomberg and Morningstar. 17