The latest Morningstar Quarterly Australian Asset Flows Report identified positive share market performance as the main driver behind this growth.
While equities only account for around half of the assets in the fund industry, the report stated they were responsible for 80 per cent of the growth over the quarter.
Morningstar fund research analyst Darren Cunneen said this demonstrates how strongly the performance of more volatile growth assets impacts industry assets.
Equities-heavy fund managers benefited significantly from this positive equity performance.
State Street Global Advisors asset base increased $5.80 billion while Schroder Investment Management experienced assets growth of just over $3 billion.
This growth was fuelled from both domestic and international share markets.
According to the report, fixed interest funds ended flat over the quarter.
Mr Cunneen said this was the result of two opposing forces.
“Australian fixed interest assets declined by just over $600 million, which was significantly more than any other asset class, while international fixed interest, at roughly half the size of its domestic counterpart, grew by $1.55 billion,” he said.
In total, there was $860 million lost in outflows from fixed interest strategies.
Ninety per cent of these outflows were from indexed bond funds.
BlackRock Australia and Macquarie were the worst hit, the report said.
Mr Cunneen said these results indicate there is a strong preference for active managers.
The report showed non-bond investors, however, did not share the same perspective on indexing with low-cost passively managed offerings, particularly global equity and multi-sector strategies, experiencing strong inflows.
Vanguard Australia, the largest index-provider, had a $1billion inflow into its suite of products.
Assets under management in the cash sector also rose, increasing $6.1 billion, bringing it to its highest level in over a year.
International equity funds remained flat over the quarter with only minimal inflows.
Mr Cunneen said this was likely the result of uncertainty caused by the US government shutdown the potential slowing of quantitative easing.
Magellan Global, Vanguard International Shares Index and BlackRock Indexed International Equity were favoured by those wanting to invest in international shares.
Investors were cautious of Australian share funds, despite strong market performance with $960 million in outflows over the three month period.
Mr Cunneen said this may be due to concerns over the Australian economy’s ability to transition away from a resources led boom.
