Why Yield Hunters are Flocking to Flexible Funds

Investors are increasingly looking to ‘unconstrained’ funds for their supposed ability to adapt to different market conditions, but performance so far has lagged

Francesco Paganelli 11 August, 2017 | 11:39AM

Passive, low-cost products are relentlessly increasing their market share, but their not the only funds raking in investors' cash. Investors’ hunt for yield has also buoyed sentiment towards flexible and unconstrained mandates. Funds in the Morningstar Flexible Allocation Global category saw cumulative inflows of over €40 billion in the three years to the end of April 2017.

The growth in assets has been fast and steady: since January 2010, these strategies have enjoyed positive flows in every single month except one, and as recently as March 2017 they recorded the second-best month since Morningstar started tracking flows data, with roughly €2.4 billion of net inflows.

Fund selection in this universe can be a daunting task. Asset management firms seized the opportunity by increasing their offerings in the space: the category currently counts over 1,500 funds in total, with a plethora of young players and a decent amount of churn in recent years.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Kames Global Diversified Inc EUR B Inc9.30 EUR0.58

About Author

Francesco Paganelli  is a Fund Analyst for Morningstar in Italy

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