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Australian managed funds see $35.9bn surge in 2025 as fixed income leads the way
Invest
Australian managed funds see $35.9bn surge in 2025 as fixed income leads the way
In a year marked by shifting market conditions and a gradual resurgence of investor confidence, Australian managed funds experienced a significant inflow of $35.9 billion in 2025. This influx was primarily driven by fixed income strategies, which have become a cornerstone for investors seeking stability amid ongoing trade and geopolitical uncertainties. According to the latest fund flow data from Calastone, the year also witnessed a notable rebound in equity funds, indicating a cautious yet optimistic re-engagement with risk assets.
Australian managed funds see $35.9bn surge in 2025 as fixed income leads the way
In a year marked by shifting market conditions and a gradual resurgence of investor confidence, Australian managed funds experienced a significant inflow of $35.9 billion in 2025. This influx was primarily driven by fixed income strategies, which have become a cornerstone for investors seeking stability amid ongoing trade and geopolitical uncertainties. According to the latest fund flow data from Calastone, the year also witnessed a notable rebound in equity funds, indicating a cautious yet optimistic re-engagement with risk assets.
Fixed income funds continued to dominate the landscape, attracting a record $17.3 billion in net inflows. This trend underscores the persistent demand for yield and capital preservation, as investors sought to anchor their portfolios amidst fluctuating market conditions. Marsha Lee, Head of Australia and New Zealand at Calastone, highlighted the pivotal role of fixed income in 2025, stating, "Fixed income was clearly the anchor allocation for Australian investors in 2025. Even as sentiment shifted through the year, demand for bonds remained resilient."
The year kicked off with volatility, particularly in the first half, due to uncertainties surrounding tariff policies. However, by May, the momentum for fixed income funds began to accelerate, reversing the outflows seen in March, which amounted to $714 million. The most significant surge occurred in July, with inflows reaching $3.2 billion, as markets began to normalise and investor sentiment improved.
As conditions stabilised, equity funds staged a remarkable comeback, netting $9.9 billion in 2025. This resurgence was a stark contrast to the outflows of 2023 and the subdued inflows of 2024. The recovery in equity demand was particularly pronounced from August onwards, with July marking the strongest month for re-risking, as equity funds attracted $2.4 billion in net inflows. This uptick reflected a decisive return of investor confidence, buoyed by lower inflation trends and diminishing fears of a global recession. Lee noted, "What’s also notable is the way investors rebuilt equity exposure as market conditions stabilised - steadily and with conviction."
The revival of equity funds was mirrored by a renewed interest in multi-asset strategies, which recorded $2.9 billion in inflows over the year. The second half of 2025 saw stronger demand for these balanced allocations, as diversification benefits re-emerged. In July, multi-asset funds saw inflows peak at $970 million, coinciding with the robust performance of equity funds. Lee observed, "What stands out is that investors remained active throughout 2025. They leaned into fixed income for stability, and then steadily rebuilt equity and balanced allocations as conditions improved, signalling cautious confidence rather than complacency."
The overall performance of Australian managed funds in 2025 reflects a broader trend of cautious optimism among investors. As geopolitical tensions and trade uncertainties began to ease, investors demonstrated a willingness to re-engage with riskier assets, albeit with a measured approach. This gradual re-risking, coupled with a steadfast commitment to fixed income, highlights a strategic shift towards balanced and diversified portfolios.
The data from Calastone paints a picture of an investment landscape that is both resilient and adaptive. As investors navigated the complexities of the global economic environment, their strategic allocations underscored a commitment to stability while remaining open to opportunities for growth. The strong performance of managed funds in 2025 sets a positive precedent for the coming year, as market conditions continue to evolve and investor sentiment adapts accordingly.
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