Fund inflows soared in 2021 across all asset classes, according to analysis of 52 territories by tech firm Calastone.
Calastone, which operates a funds network, analysed tens of millions of buy and sell orders and found that investors increased their holdings in every asset class except real estate.
The net inflows were $150.5 billion – a 140% increase. The primary factors for the dramatic increases were a combination of savings made during the pandemic, as well as 2021’s vaccine-fuelled pandemic optimism.
Flows into equity funds leapt by 164% year-on-year to $52.8 billion, with buying concentrated in the first six months of 2021, peaking at $8 billion in March, though it tailed off as the year went on.
By October, equity fund flows fell to £863 million, the lowest level in more than a year as inflation and fears over high asset prices continued to dominate investor attitudes.
However, optimism returned at the end of the year, said Calastone, after the Omicron variant was unlikely to cause the same disruption, leading inflows to jump back to $4.2 billion.
In addition, equity funds were linked to local vaccine drives, with UK investors flocking the quickest, followed by those in the rest of Europe and in Asia. ESG funds saw a strong performance in 2021, gathering $32.1 billion in new capital. UK and European investors have particularly driven the ESG boom. Calastone noted that it is also taking off in Australia and parts of Asia.
ESG active funds enjoyed greater inflows, around two and a half times greater than passives in 2021.
Calastone said it is a “very unusual pattern after several years of index funds beating active ones in the race for new capital”. Meanwhile real assets struggled in 2021 as it continued to see outflows.
Investors in Europe and the UK were especially negative, while Australians continued to add cash in, though at a much slower rate by the end of 2021 noted Calastone.
Edward Glyn, head of global markets at Calastone said: “Confidence and cash combined in 2021 to drive investors on a fund buying spree. “The exponential growth of inflows to ESG funds has been truly staggering. Asset managers have devoted a huge marketing drive to ESG funds over the last two years and that has certainly driven awareness and uptake.”
Glyn said that while the rate of growth for ESG funds is likely to slow, 2022 may break another record. “The value of ESG funds under management is still dwarfed by traditional categories, so there is a lot of headroom to grow further,” he added.
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