Asset flows increased by 18% (to $51 billion) from Q1 2022 to Q1 2023, based on active manager strategy asset data from Investment Metrics, a Confluence company’s Global Database. Non-US equity and emerging markets equity portfolios saw a sharp increase in asset flows. And, not surprisingly, US fixed income saw a large increase in asset flows. Russia invaded Ukraine in the beginning of last year, which most likely prompted many institutional investors to become more defensive with their portfolio asset allocations.
There was $51 billion of reported tax-exempt (institutional) inflows in the first quarter of 2023. This is a clear increase compared to $43 billion seen in the first quarter of 2022. Additionally, there were stark differences in the types of active manager strategies that gained institutional money. Non-US equity had $3.9 billion of reported inflows, which is a 28% increase compared to what we saw in Q1 2022. Also, emerging markets equity had over $1 billion of reported inflows in the first quarter of this year. In the first quarter of last year, emerging markets equity only had $395 million of reported inflows. In US fixed income, there was a preference for US Corporate bond strategies from active managers. There were also two large institutional mandates that went to emerging markets debt. Some institutional investors were clearly trying to take advantage of the low valuations in public equities and in emerging markets.
Active asset management firms that have a majority of their firms’ assets in fixed income strategies sat atop our best performing asset gathering list in Q1 2023. NISA, PIMCO, and Loomis, Sayles saw significant asset inflows on the fixed income side. Meanwhile, JP Morgan, GQG, and William Blair saw their inflows on the equity side.
Below you will find the top active investment strategies, based on reported inflows, in the fixed income and public equity asset classes in Q1 2023. PIMCO’s Emerging Markets Debt portfolio saw over $5 billion of inflows from US Public Plans in the first quarter. RBC Bluebay also saw inflows from US Public Plans in the first quarter of over $2 billion. Within public equity GQG saw over $1 billion of inflows for their global equity investment strategy from a US Public Plan. William Blair also had over a $1 billion investment from a US Public Plan in their International Leaders portfolio.
Below, you can find some of the more notable investment strategies gathering assets in Q1 2023. PIMCO’s multi-asset portfolio, Inflation Response Multi-Asset, saw over $300 million of inflows from US institutional investors and were sub-advised mandates. Additionally, AQR’s Global Risk Premium – Low Volatility strategy had over $200 million come in from a US institutional investor.
Active managers in the institutional investment industry saw an excellent start to the year. Good timing played a factor for institutional investors as public equities and fixed income provided good returns in Q1 2023. We expect this market trend to continue. However, there is a significant risk of a downturn if the US Congress is unable to raise the debt ceiling and the US economy goes into a needless recession. It looks like there will be a deal between Democrats and Republicans before the June 5th deadline, so this should help capital markets this year.
The material presented in this document is an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or any issuer or security or similar.
This document contains general information only, does not consider an individual’s financial circumstances and should not be relied upon for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should always be given to consult a Financial Advisor before making an investment decision.
Investment Metrics, a Confluence company, does not provide investment advice and nothing in this document should be considered any form of advice. Investment Metrics accepts no liability whatsoever for any information provided or inferred in this document.