What Investors Did Last Week
Fund flow data from last week indicates that retail
investors took a breather from equity investments, but they continue
to buy fixed income funds — albeit at a slower pace, especially risky high-yield
funds.
Equity Funds
Investors withdrew $66.7 million from equity funds last week after committing
$1.1 billion the week before. International and Global equity funds experienced
most of the outflows, while Aggressive and Small Cap Growth/Value funds reported
inflows. Total assets under management at equity funds are now $2.4 trillion.
Fixed income
Investors continue to allocate financial capital to bond funds, as taxable
bond funds reported $1.7 billion of inflows last week. Specifically, $729
million went to Investment Grade bond funds and High Yield took in $332 million;
year to date, $18 billion has been allocated to high yield funds, beating the
record $17.87 billion for all of 1997. International and Global Debt funds
reported a second week of inflows, as US investors seek higher yields elsewhere.
Thus far, fixed income funds have experienced $71 billion of inflows.
May Employment Data
On a separate note, beginning June 6, the Bureau of Labor Statistics will
be making some significant methodological changes to the way it reports the
monthly employment report and could be misinterpreted by market participants who
are unaware of the changes. These amendments include:
Moving from the Standard Industrial Classification System (in use since the
1930s and more appropriate to a manufacturing-dominated economy back then) to
the North American Industry Classification System. As a result, every sector of
the economy has been restructured and redefined to reflect an economy now
dominated by the service sector (60%). The Information Sector will now
combine communications, publishing, motion picture and sound recording, and
online services. And manufacturing will have a sub-sector devoted to computers
and electronics, including reproduction of software.
Furthermore, the old employment numbers excluded some workers, mostly
employees who work in the department of Defense-owned establishments, but the
new series will now include these workers.