According to Equity Trustees, this was followed by 18 new Australian equity funds, 16 alternative funds and 13 funds each in global equities, domestic real assets and Australian fixed income funds (13 each).

With Equity Trustees launching just 10 global fixed income products in 2022, the firm has credited the category’s recent popularity with rising interest rates offering superior returns and sustained investor interest in exchange-traded funds (ETFs).

Namely, the rapid spike in global interest rates in 2022. and 2023 increased market volatility and unsettled traditional investments in stocks and bonds. In response, investors have increasingly gravitated toward fixed-income ETFs.

Taking a closer look at the asset class, Johnny Francis, general manager of funds of funds at the capital custodian, highlighted that the launch of private credit and debt funds, in particular, is on the rise.

"There has been an increase in private credit and debt funds, with some of them flowing into unregistered wholesale funds," Francis said.

“Investors realized that non-bank lenders and their private credit funds could provide a source of income. The big traditional banks reduced their overall lending and these newer fund managers stepped in to fill the gap and were welcomed by investors.

“This is why more fund managers, both here and overseas, are offering these structures. We are seeing increased interest from offshore fund managers, particularly those from North America, wanting to access the Australian market.

However, global equities have attracted the most investor dollars, according to Equity Trustees.

Namely, international equities saw year-on-year financial flows that reached $40 billion in April 2024, while global fixed income saw around $14 billion.

Francis explained that an important factor behind the increase in global asset flows was largely driven by Australia's mandatory superannuation investment.

"As the superannuation industry continues its trajectory to exceed Australia's total GDP, these funds need to be deployed, therefore asset managers and investment managers are increasingly allocating funds to products with global exposure," he said.

Francis added that in terms of investment approach, the main focus of the new funds is income and capital protection, followed by growth and value themes.

Looking ahead

Equity Trustees predicts that the next wave of funds will focus on alternatives, private credit and private debt, particularly targeting private high net worth groups.

Alternatives grew from seven launches in 2023. to 16 in 2024, with further increases expected.

"We also expect the continued growth of ETFs, which are a readily available product for investors and self-managed super funds," Francis said.

He also observed a change in the marketing and distribution strategies of overseas fund managers in Australia, stating: “While some fund managers are implementing an in-and-out marketing strategy or partnering with third-party specialists, the ideal model is to have a local presence in the long run as it is more successful with a local distribution team selling products.

"Institutional investors and asset allocators want to meet key portfolio investment decision makers," he said.