Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Record managed fund flows in September quarter
The largest global funds network, Calastone, has reported record new capital inflows into managed funds in Australia during the third quarter.
Australians committed $6.3 billion of new capital to equity funds between July and September, supported by new money looking for international exposure as developed economies began to reopen following successful vaccination programmes.
Roughly 68 per cent of the new capital was invested in funds focused on international equities, up from 61 per cent in the second quarter.
But it wasn’t just international funds that caught investors’ eyes. It was another massive quarter for ESG funds, which have become a focal point of investor portfolios amid the pandemic. ESG funds garnered their largest-ever share of equity inflows, with $1 in every $4 of net inflows committed to those with an ESG focus.
Calastone says, “The total of $1.6 billion was almost double the combined inflow during every quarter since the beginning of 2019. Soaring inflows to ESG funds also boosted the actively managed segment, which took in $8.40 in every $10 of equity inflows in the third quarter, compared to the longer run average of $7.40.”
In total, Australians added a net $15.7 billionn in the third quarter across all asset classes, which was more than double Calastone’s previous record, set in Q4 2020. The platform said, “Alongside the highest inflows yet to equity funds, mixed assets and fixed income also saw the largest inflows on Calastone’s record between July and September. Meanwhile, optimism on real estate also improved, having dwindled during the second quarter. Investors added $543 million to property funds, in line with the average for the last year but significantly better than the more subdued second quarter ($450m).”
For the month of September, global equity markets traded sideways while the local bourse fell. This saw ‘just one fifth of the quarter’s new capital committed to funds.’
Head of Australia and New Zealand at Calastone, Ross Fox, was pleased with the take-up in ESG funds. He said, “We are particularly interested in the big inflow to ESG funds. Australia has lagged a long way behind its global peers in this area over the last two years, but this may be the beginning of the catch up. In the UK, almost $6 in every $10 invested in equity funds in the last two years has been committed to ESG funds, compared to just $1.30 in Australia. Q3 marked a step-change.”
