Traditional core and core-plus fixed-income assets as well as domestic and international equities saw outflows in 2013, while long-duration fixed-income assets associated with liability-driven investment strategies and unconstrained fixed income saw significant inflows, according to Callan Associates' annual Style, Trends, Analysis and Research report.
In Callan's analysis of separate account strategies and commingled vehicles, domestic core-plus fixed-income strategies saw net outflows of $29.2 billion in 2013, compared with net outflows of $21.4 billion in 2012.
Core fixed-income offerings had net outflows of $11.9 billion in 2013, compared with net outflows of $6.3 billion in 2012.
Long-duration fixed-income offerings, on the other hand, which many corporate plans have embraced as part of LDI strategies, had net inflows of nearly $54 billion in 2013.
“It's really more and more clear how much the corporate pension market is diverging from the public pension market and that foundations and endowments are more of where the public (market) is,” said Gordon Dickinson, Callan's senior vice president in its institutional consulting group and project leader on the STAR report.
“Corporate is moving to long duration, extending duration,” Mr. Dickinson said. “All the plans being put in place are really being implemented.”
As part of this year's report, Callan Associates also created an analysis under the category of unconstrained, or “benchmark-agnostic” fixed-income strategies, based on the firm's observations of clients wishing to move away from strategies benchmarked to the Barclays Capital Aggregate Bond index, Mr. Dickinson said.
The index returned -2% in the year ended Dec. 31, its first negative calendar-year return since 1999.
A total of 28 unconstrained fixed-income strategies saw net inflows of $7.2 billion in 2013, for a combined $42.3 billion in total assets.
“We identified all the products we thought could really fit that description to create this new group because we thought it was going to produce what it really did,” Mr. Dickinson said.
Separately, global equities saw net outflows in 2013 as well. Both active and passive domestic equity strategies lost more than $160 billion combined for the year, almost 12% of domestic equity assets at the start of 2013, while active and passive international and global equities collectively lost $28 billion, about 3% of assets.
Mr. Dickinson attributed the outflows of equities to corporate plans' strategies reducing their overall allocations to the asset class, despite strong returns.
“2013 was very strong, but these decisions had already been made,” Mr. Dickinson said. “You wonder if people had realized the market would be as strong as it was what they would have done.”
Callan's STAR report analyzes separate accounts and commingled vehicles covering more than 2,100 products across 24 asset class categories managed by more than 600 firms with assets in excess of $2.6 trillion. The report also analyzes more than 2,600 mutual fund products with combined assets exceeding $3.7 trillion.