Investors across Asia continued to gravitate toward fixed income funds in 2024[1], marking a dramatic upswing, with net inflows surging nearly threefold compared to 2023, according to the latest Global Fund Flow Data from Calastone, the largest global funds network. Equity funds fell significantly out of favour, plunging from a positive inflow of USD1.9 billion in 2023 to an outflow of USD0.88 billion in 2024.
Bond investments were the most significant driver of inflows across Asia in 2024. The region recorded USD26.38 billion of net inflows into fixed income strategies, surpassing the total combined net inflows of the previous five years. This trend mirrors a global shift toward fixed income, driven by falling interest rates and cautious economic sentiment.
Inflows in Hong Kong rose from USD3.8 billion in 2023 to USD11.67 billion in 2024, more than tripling, while Singapore nearly doubled from USD3.01 billion to USD6.49 billion.
Asia equity funds remained firmly out of favour for the third consecutive year. Driven primarily by local investors shedding assets, Asia saw net outflows accelerating to a record USD0.88 billion between January and November 2024. This marks a notable contrast to 2021’s USD11.75 billion net inflows, with the shift highlighting growing investor caution toward regional equities and a broader preference for more predictable yield opportunities.
Mixed asset funds have shown resilience in turbulent markets, posting net inflows of USD1.43 billion in 2024. While a significant drop from the record USD11.8 billion seen in 2021, reflects continued investor interest, even as overall market conditions remain challenging.
The steady inflows in 2023 and 2024, though more modest, highlight a shift towards cautious optimism after the explosive gains of recent years. As investors seek balanced strategies to navigate uncertainty, mixed asset funds remain a popular choice, offering diversified exposure across asset classes as investors.
The ESG investment landscape in Asia took a sharp turn in 2024, with net outflows hitting a staggering USD3.5 billion—the largest decline on record. This marks a steep reversal from the USD4.91 billion inflows seen just two years prior in 2021, highlighting the growing uncertainty in the region’s ESG space. While 2020 and 2021 were hailed as breakout years for sustainable investments, 2023 and 2024 tell a different story, as investors pulled back sharply amid shifting market dynamics and wavering confidence in green strategies.
Justin Christopher, Head of Asia at Calastone, remarked: “2024’s fund flow data highlights the agility and adaptability of investors across Asia in responding to evolving market conditions. The decisive pivot towards fixed income reflects a strategic response to lower interest rates, while sharp equity fund outflows, coupled with sustained demand for mixed asset funds, underscore the importance of diversification in navigating uncertainty. Meanwhile, record-breaking outflows from ESG strategies point to growing scepticism around sustainable investments, as shifting market dynamics and wavering confidence continue to reshape investor priorities. As we move further into the year, we will monitor how investor behaviour continues to evolve through our fund flow data.”
For more details on the global fund flow data, please refer to this link: Global Fund Flows: Bonds Lead the Way in a Shifting World
[1] All data referenced for 2024 reflects the period from January to November