What Are Long- And Short-Term Fund Flows Telling Us Now?
Periodically, I will write about and
interpret trends in institutional and retail investor fund
allocations–usually focusing on flows to investment vehicles with shorter-term
objectives. Today, I will again discuss some relevant short-term flow data, but
I will also touch on longer-term data, namely pension and 401(k) data.
Short-term flows
As of April 3, assets of money market mutual funds stand at
$2.243 trillion dollars, $28.84 billion less than the previous week. Retail
investors withdrew $3.41billion while Institutional investors withdrew $25.42.
But despite the third straight week of outflows from money market mutual funds
by retail and institutional investors, the ratio of cash to the Wilshire 5000
market-cap weighted index is still at record high levels, now at 28%.
Long-term flows
401(k) equity exposure dropped to an all-time low of 56.6% in
February, as investors continued to pull out of stocks in favor of bond funds
and stable value funds. Transfers from 401(k) investors from equities into bonds
was at 89% last month.
These figures in longer-term data further confirm the extreme
pessimism that investors, specifically retail investors, have towards equities,
and is usually indicative of a market reversal.