COVID-19 crushes mutual funds causing record outflows and a bond rout, while passive funds see unprecedented inflows______

Fund flows are responding in surprising ways to the highest recorded volatility in the history of financial markets and the associated stock market crash, according to the latest Fund Flow Index (FFI) from Calastone, the largest global funds network. In a month of superlatives, overall, UK-based funds have seen the largest outflows on record for any month by a long shot, the most week-to-week volatility, and the biggest divergence between the appetite for different asset types on Calastone’s record. The FFI: All Assets dropped to a record low of 47.2 (a reading of 50 means buys equal sells).

Some key highlights from this months FFI:

  • March saw record fund outflows, record flow volatility week-to-week and record divergence between flows from one asset type to another
  • Record fixed income outflows on concerns over credit quality in sovereign and corporate debt markets
  • Equity outflows were astonishingly small for a month of such market turmoil
  • Passive funds saw record inflows, while active funds saw near record outflows
  • UK equity funds were big winners enjoying second-largest inflows in four years
  • European equity funds were biggest losers

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