Investors pull money out of bond funds, pour it into equity funds
Investors poured US$54.2 billion into all-equity mutual funds and exchange-traded funds last month, the third-largest inflow on record, data from TrimTabs Investment Research showed on Sunday.
All three of the largest monthly inflows into all-equity funds have occurred this year, and this year’s inflow of US$286 billion into all-equity funds is the biggest since 2000, TrimTabs added.
“When fund investors are as upbeat as they are now, a short-term pullback would not be a surprise,” said David Santschi, chief executive officer at TrimTabs Investment Research.
Fund investors keep dumping bonds, however. Bond funds posted five consecutive monthly outflows for the first time since late 2003.
Outflows have picked up even though the average bond fund was up 1.3 per cent in September and 0.9 per cent last month, TrimTabs said. Bond mutual funds and ETFs redeemed US$13.5 billion last month, almost triple the outflow of US$4.9 billion in September, the firm noted.
When fund investors are as upbeat as they are now, a short-term pullback would not be a surprise
“We cannot emphasise enough how much recent outflows mark a dramatic shift for the fixed-income world,” Santschi said. Bond funds have not posted five consecutive monthly outflows since August 2003 to December 2003, TrimTabs said. US economic growth slowed last month, while real wages and salaries climbed a scant 0.5 per cent year over year, the research showed.