Global net inflows at record high
Asia had the highest organic growth rate of net inflows (12.8%) among all regions globally, according to Morningstar data.
Asia received $125bn in net fund inflows in 2014 compared to $42bn in 2013, the firm said in its Global Flows Report for 2104.
Net Flows and Assets by Geographic Region of Domicile, US$bn
Equities most popular
Globally, in terms of asset classes, equities received the highest amount of net inflows ($439bn), followed by fixed income ($371bn).
"As the search for yield becomes ever more challenging in the global fixed-income space, investors still appear to value the lower volatility of bonds," said Alina Lamy, senior markets analyst. "Despite extremely low yields, fixed-income funds collected $371 billion."
Net inflows to allocation funds grew 9.7% to an estimated $268bn in 2014.
"Allocation funds tend not to have the volatile flows of the equity and fixed income categories because investors are less concerned about market fluctuations when they are choosing a fund with built-in diversification across asset classes," the firm said.
Passive vs active
In Asia, the passive investing trend has some traction, but in fixed income the clear preference is non-index funds.
"Investor preference for less expensive, passively managed index funds and ETPs, particularly among US equity funds, is a clear trend in the United States, but one that does not seem to hold for cross-border, European and Asian funds."
Estimated Net Flows, Major Regions, Index Versus Nonindex, 2014
In 2014, the total global assets of open-end and exchange-traded products were nearly $30trn in 2014, up from $27trn the prior year. About one-third of 2014 flows went into global equity funds.
"Rising global flows, and rising equity flows in particular, suggest continued investor confidence in the markets and their potential for future growth," the firm said.