According to the research, mutual fund net redemptions of -$7.9 billion in August are largely due to fixed-income outflows. Mutual funds in the nontraditional bond categories and bank loan strategies topped the list with combined flows of $12.6 billion in August.
Flows for exchange-traded funds (ETFs) were also negative during August (-$21 billion), but the major drain on sales were the domestic equity asset classes. U.S. equity and sector equity ETFs combined for total outflows of -$18.6 billion. Europe stock and foreign large blend were the most sought-after ETF categories.
The research also surveyed consultants, who expect both nonprofit institutions and defined benefit (DB) pension plans to increase their allocations to emerging market equity. One-half of these consultants expect DB pensions’ emerging market equity portion to rise, and 83% anticipate nonprofits to do the same.
In addition, research from Cerulli revealed that the largest institutions are looking to manage strategies in-house at lower cost than even outside managers can run passive strategies for them. As of third quarter 2012, the 10 largest pensions by internally managed assets run, on average, 54%, or $627 billion, of the portfolio within the organization. Of this total, domestic strategies comprise the greatest portion.
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