International stocks make up the most popular mutual fund flows by asset class, according to new research.
Cerulli Associates discloses this finding in “The Cerulli Edge: U.S. Asset Management.” Focusing at length on alternative investments, the report also offers insights into fixed income, private equity, customization and organizational alignment to enhance distributor relationships, marketing and sales plans.
For the trailing 12 months ended February 2014, the survey finds, mutual fund flows of international stocks constituted $142.2 billion, a total that significantly outstrips other asset classes. The next three largest asset classes for the prior 12 months included:
- Balanced funds ($94 billion);
- U.S. stock ($60.1 billion); and
- Alternatives ($41.3 billion).
“[P]ortfolio managers have tilted away from traditional domestic core equity and fixed income,” says Cerulli Director Cindy Zarker. “As economic signs of recovery heightened concerns of rising interest rates, many managers presented institutional and retail investors with investment options to hedge this risk.”
The report adds most institutional investors intend to maintain or increase their alternative asset allocations in 2014. Among the target sectors within this asset class are private equity, hedge funds, real estate and infrastructure.