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Australian investors add $8.6 billion to managed funds amid global uncertainty
ROOT
Australian investors add $8.6 billion to managed funds amid global uncertainty
Australian investors demonstrated cautious resilience by adding $8.6 billion to managed funds between January and May 2025, according to new data from Calastone.
Australian investors add $8.6 billion to managed funds amid global uncertainty
Australian investors demonstrated cautious resilience by adding $8.6 billion to managed funds between January and May 2025, according to new data from Calastone.
The inflows represent a significant increase from the $380 million that flowed into managed funds over the same period in 2024.
Data from Calastone, the largest global funds network, captured extraordinary shifts in investor sentiment across early 2025.
The year began with optimism in January following US President Trump's return to office, but confidence faltered by February as US exceptionalism faded and central banks pushed back on rate-cut expectations.
Australian domiciled equity funds were hit hardest in February, shedding $800 million before returning to three months of consecutive net inflows from March to May.
The equity asset class gained $1.25 billion year-to-date, marking a remarkable rebound from the $3.1 billion it lost from January to May last year.
Multi-asset funds also staged a strong recovery, with local investors tipping $1 billion into Australian domiciled multi-asset funds year-to-date, compared to $1.65 billion lost over the same period last year.
Bond funds maintained their dominance, swelling $4.1 billion year-to-date, though momentum slowed after record inflows in the second half of 2024.
The Liberation Day tariffs and subsequent volatility in April produced different responses across regions, with Asian investors turning bearish while Australian investors leaned into the volatility, adding $3.15 billion to their managed fund portfolios across all asset classes.
April 2025 marked the highest total net allocation since July 2024 when dovish signals from central banks caused a surge in fixed income fund investment in Australia.
Marsha Lee, Head of Australia and New Zealand at Calastone, said Australia had been relatively insulated from the Trump tariff fallout.
"What's interesting is how relatively insulated Australia has been from the Trump tariff fallout, with April net inflows rivalling record highs," she said.
"The notable drop in investment during February was largely equities-led as uncertainty brewed and US exceptionalism faded."
Lee said Australian investors appeared to be cautiously rotating back into equities while scaling down their reliance on bonds.
"Australian investors appear to be cautiously rotating back into equities while scaling down their reliance on bonds — a stark contrast to the flight-to-safety we saw throughout 2024," she said.
"This is likely driving a strong comeback for multi-asset funds, which appear to be regaining their footing after extended and unusual periods of high correlation between bonds and stocks due to post-Covid stimulus and low rates."
Lee said normalising bond yields offered diversification benefits that could see 60/40 funds re-emerge.
"With bond yields normalising, offering diversification benefits, we could see 60/40 funds re-emerge from the wilderness," she said.
Calastone processes over $500 billion of investment value each month across 4,500 clients in 57 countries and territories.
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