Despite it being another challenging year, winners of the Refinitiv Lipper Fund Awards 2022 consistently delivered attractive returns to investors in the medium to long term, according to Xav Feng, director of Lipper Asia Pacific Research, Refinitiv.
As at end-2021, winners of the awards had generated an average return of 77.1% in the past three years. In the five- and 10-year categories, average returns were 77.36% and 158.77% respectively.
Locally, the leading sectors that enjoyed the largest net inflows were equity global (US$1.83 billion), bonds and others (US$1.56 billion) and absolute return and others (US$960 million).
Sectors that suffered from the largest net outflows last year were money market RM(US$4.4 billion), bond RM (US$570 million) and mixed asset RM balanced — global (US$200 million).
On asset classes, equity enjoyed the largest net inflows of US$6.53 billion, followed by real estate (US$990 million) and mixed assets (US$850 million).
Asset classes that suffered from the largest net outflows were money market RM (US$4.44 billion), other (US$50 million) and alternative (US$30 million).
“The Malaysian market received total net inflows of US$4.6 billion last year, lower than US$9.2 billion in the previous year,” says Feng.
On the global front, investors put in much more money in markets via various channels in 2021 than the previous year. This is evidenced by the total net inflows of US$2.78 trillion enjoyed by the global fund markets in 2021, a growth of nearly 80% year on year.
In terms of sectors, the biggest winners globally last year were money market USD (US$420.9 billion), equity global (US$298.1 billion) and bond RMB (US$226.3 billion).
Sectors that experienced the largest net outflows were alternative (US$80.5 billion), mixed asset RMB aggressive (US$50.5 billion) and real estate (US$43.2 billion).
From an asset class perspective, the key beneficiaries last year were bond (US$1.15 trillion), equity (US$985.58 billion) and money market (US$549.4 billion). Real estate suffered, however, from net outflows of US$43.99 billion.
The US market was the most favoured last year, receiving net inflows of US$1.27 trillion; it was followed by Europe (US$853.7 billion) and Asia ex-Japan (US$551.2 billion). Latin America was the loser with net outflows of US$76.4 billion.
Feng says 2021 was challenging, as the pandemic continued to haunt global economies and markets. Adding to that was a surge in inflation worldwide and supply chain disruptions, causing the supply of various goods such as microchips to face challenges in meeting demand.
The supply bottleneck seemed to have eased at the start of this year, but the conflict between Ukraine and Russia has put the issue back in focus.
Feng says: “Higher prices of commodities such as food and energy will push up inflation further, erode the value of incomes and weigh on demand. In particular,neighbouring countries [of Ukraine and Russia] will also grapple with disruption in trade, supply chains, remittance and a historic surge in refugee flows.
“The conflict will cause lower business confidence and market uncertainty that will weigh on asset prices. Coupled with tighter monetary policies, this could spur capital outflows from emerging markets.
“In the longer term, the war may fundamentally alter the global economy and geo-political order, should energy trade shift, supply chains reconfigure, payment networks fragment and countries rethink their reserve currency holdings.”