Funds Enjoy $820B in First-Half Inflows Worldwide

August 31, 2007 (PLANSPONSOR.COM) - The fund industry worldwide collected more than $820 billion of net inflows in the first half of 2007 - 60% higher than last year's pace, according to Strategic Insight.

A news release said, however, that financial market declines and related events since late July suggest that industry growth in Europe and Asia will further diverge.

According to the press announcement, net flows to mutual funds in Asia were three times greater than in Europe during the first half, excluding money market funds. 

Even in Europe, despite the low level of total industry flows to long-term funds, many products continued to get money. More than 1,000 funds achieved inflows exceeding €100 million in the first six months of 2007, the financial services research firm said.

Moreover, across Europe during the volatile month of July, only three of the fifteen top selling long-term funds from the first half suffered net redemptions. “Many funds will still attract very high levels of net sales, yet certain categories in Europe, especially dynamic money market, cash plus, absolute return, market neutral, and some hedge strategies, will be regarded less favorably”, said Jag Alexeyev, Managing Director and Head of Global Research at Strategic Insight, in the news release.

In addition, high quality money market funds that provided NAV stability and liquidity through the recent ‘cash plus’ crisis will benefit from additional allocations. Money market funds captured €18 billion during July, adding to the €115 billion they absorbed in the first half of the year, Strategic Insight said.

Meanwhile, the Asia fund industry will build on the $250 billion of record net inflows in the first half.  

According to the news release, China “staged a remarkable show” in the second quarter with nearly $50 billion of inflows to equity and mixed asset funds, second only in volume to U.S. registered stock funds. 

Net sales in Japan doubled during the first half, partly driven by many successful new fund launches (especially around real estate, infrastructure, and diversification), benefiting both international and local money managers. Strong gains were also notched in Korea, India, and Thailand.

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