Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Sovereign investors' dislike for equities mostly fades in second quarter

EconomyAug 28, 2019 06:31PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. A trader looks at screens as he works on the floor at the New York Stock Exchange (NYSE) in New York

By Tom Arnold

LONDON (Reuters) - Sovereign wealth funds' distaste for equities mostly faded in the second quarter, with some investors turning to emerging- market passive equity funds, data from the research firm eVestment showed on Thursday.

Passively managed equity funds outside the United States took in $1.77 billion from sovereign investors during the quarter, after allocations shrank in the previous three quarters. Outflows from all global equity funds dwindled to $652.7 million, much less than in recent quarters.

"Negative sentiment in aggregate by sovereign wealth funds toward global equity exposure mostly disappeared in (the) second-quarter, replaced in part by clear demand for passive emerging market equity exposure," said Peter Laurelli, global head of research at eVestment, which collates data from firms managing money on behalf of institutional investors.

Global stocks, as measured by MSCI All Country World Index, rose 1.8% in the second quarter. The MSCI Emerging Markets Index slipped 1.4%. Worries about the U.S. China trade war and the risk of a global recession have buffeted both markets since.

Slowing redemptions in passive European, Australian, Far Eastern and global equity funds and active large-cap Japan and all cap Asia ex-Japan equity funds were one reason for the greater interest in non-U.S. equity exposure, Laurelli said.

Emerging-market passive equity funds brought in $1.92 billion during the quarter, taking their allocations to nearly $7 billion since the beginning of 2018.

"At the same time, there have been net outflows from active global emerging-market equity strategies, which implies that sovereign wealth funds want emerging-markets equity exposure, but they are less interested in getting this exposure through traditional actively managed products," said Laurelli.

Within fixed income, outflows continued during the quarter from U.S. fixed income funds, but global fixed income saw inflows of $841.5 million, down slightly from the previous period.

Sovereign wealth funds shifted into global government fixed income, putting in $1.86 billion during the quarter, a turnaround from outflows in the three previous quarters.

In a bid to seek cover from the risk of a global downturn, investors have been snapping up bonds, sending negative yields cascading across the euro zone.

Sovereign investors' dislike for equities mostly fades in second quarter

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email