What Have Institutional Investors Been Up To?

Regular readers of my column know that I periodically write about investor
flow data, as this is a true measure of investor positioning and sentiment
towards equities. Although I mostly report on retail investor flow data, I also
cover institutional investor activity whenever the relevant data becomes
available–such as today.

In its latest release of fund flow data, the US Federal Reserve is reporting that
US equities now make up 41.8% of the $3.8 trillion worth of financial assets
held by private pension funds, whereas in the Fed’s previous report, stocks only
comprised 39.8% of total pension assets.

To give readers a historical perspective, for the past 30 years–the
average equity holding as a percentage of total financial assets has been about
43.1%. So, although current pension fund’s equity holdings are about 1.3% ($50
billion) below their average, they are not as underrepresented as when I last
discussed the data in July, when equities were 39.8% of pension assets.
Therefore, the S&P 500
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is not as likely to benefit from pension
buying in the months ahead as it now appears that pension’s equity holdings are
now more in line with their historical averages. 

Edward Allen