COVID-19 Crushes Mutual Funds

Fund flows are responding in surprising ways to the highest recorded volatility in the history of financial markets and the associated stock market crash.

#covid19 has caused massive outflows from mutual funds according to our latest Fund Flow Index. Bonds were the worst hit, while passive funds saw significant inflows #coronavirus #funds #markets VIEW: https://t.co/iRatXj2xs9 pic.twitter.com/Xp2WCxFDTD

— Calastone (@CalastoneLtd) April 6, 2020

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).

Key highlights from this month’s 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

Source: Calastone