Long-only asset managers reported Q4 2018 institutional assets under management of $23.81 trillion to eVestment according to the just-released eVestment Q4 2018 Traditional Asset Flows Report. Net institutional flows totaled -$234.4 billion in the fourth quarter pushing full year 2018 redemptions past the half trillion mark to -$517.5 billion.
Fixed income investment managers, excluding cash management strategies, reported net institutional outflows of -$141.1 billion during the most recent quarter and were roughly flat on the year, +$10.5 billion. Institutional investors did not discriminate between active and passive fixed income during the quarter, pulling assets from both categories.
On a geographic basis, only Japan (+$1.4 billion) and Asia-Pacific (+$0.5 billion) fixed income strategies managed to draw in net new allocations during the quarter. We note that within Asia-Pacific fixed income, hard currency strategies drew the largest allocations as was the case in the EM debt complex (+$4.4 billion for EM hard currency versus outflows for EM local and blended currency). Elsewhere, U.S., Europe and EAFE fixed income strategies, all of which reported substantial and consistent net inflows over the first three quarters of 2018, all saw net redemptions to end the year.
Results on a strategy basis were mixed. Active U.S. long duration credit and global credit managers were two among a handful of fixed income universes to see institutional support during the quarter, +$9.4 billion and +$2.6 billion, respectively.
Interestingly, passive U.S. long duration strategies reported aggregate net redemptions. Strategies such as U.S. core, U.S. core plus, global aggregate, and global unconstrained – all major “winners” on the flows front through Q3 – posted significant outflows in the fourth quarter.
Long-only equity managers reported net institutional outflows of -$106.8 billion in Q4 2018. Contrary to the fixed income space, passive strategies outraised active strategies by a wide margin in the most recent quarter.
Redemptions from active totaled -$139.5 billion versus allocations to passive of +$32.7 billion. Passive S&P 500 (+$16.9 billion), Japan (+$7.7 billion) and ACWI ex-U.S. (+$6.5 billion) strategies drew the most assets in Q4, while passive Europe (-$2.5 billion) and passive Russell 1000 (-$ 3.8 billion) products saw the largest outflows.
In active equities, there were a handful of bright spots including the fourth consecutive quarter of inflows for China A-shares strategies and allocations equivalent to between +0.6% and +1.4% of AUM for all cap growth strategies of various stripes.