Fixed income strategies, excluding cash management products, saw net inflows of +$101.2 bn during the quarter with global (+$40 .7bn), U.S. (+$39.4bn), and emerging markets (+$19.7bn) fixed income managers accounting for the bulk of allocations. U.S. core/core plus, global aggregate, and global multi-sector fixed income products were again major recipients of institutional allocations in Ql 2018 while EM flows were widespread across a number of dimensions including currency basis and corporates only vs. issuer-agnostic. Across the credit spectrum, institutional demand was robust for IG corporate/credit strategies, positive through various geographies, totalling +$15.0bn in 1Q’18.
However, flows continued to deteriorate for high yield, bank loan/secured loan, and convertible bond strategies. For all three categories eVestment saw current quarter flows come under the prior 1 and 3 year averages – the difference was particularly poignant in HY with 1Q’18 outflows of -$19.9bn versus -$11.2 bn (4Q’17), -$6.2bn (2017 quarterly average), and +$0.6bn (3 year quarterly average).
Long-only strategies reported net institutional flows of -$2.8bn in the first quarter of 2018. This stood in stark contrast to the four straight quarters of net allocations in 2017 which totalled +$286.8bn. Although headline flows were roughly flat to begin the year, we continued to see institutional support for long-only fixed income and global multi-asset strategies. In the equities space, flows for non-U.S. strategies improved relative to Q4 2017, while U.S. strategies experienced yet another quarter of aggregate redemptions.