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Continuing Equity Outflows Confirm Declining Risk Appetite
After peaking in Q1, retail investment in equity instruments courtesy of ongoing disenchanment with performance continues and as Lipper reports, "for the third week in a row equity fund investors were net redeemers from their accounts, taking out approximately $5.6 billion for the week ended May 25, 2011. The three-week total now stands at -$12.7 billion, the worst figure for this group since August 2010." This follows the latest ICI weekly report which saw a 4th consecutive outflow from domestic equity mutual funds. Which llikely means that as margin account cash continues to drop, margin debt has to offset it. As we disclosed recently, April margin debt grew to a fresh multi year high. Expect this number to grow even more in May, then June, and so forth until the levered beta chase ends in tears. More observations on what Goldman dubs "declining risk apetite" below.
Equity outflows extend; bond, MMFs inflow
As per Lipper FMI data, equity funds saw -$1.8 bn in outflows this week, the fifth consecutive week of outflows. This week saw outflows in both US and non-US funds, of -$0.6 bn and -$1.1 bn, respectively. This compares to -$25 mn last week (-$1.5 bn in domestic funds, offsetting inflows in non-US funds), as per ICI. Total bond inflows were +$2.6 bn (+$2.9 bn in taxable, offsetting -$315 mn in muni bond outflows), versus +6.5 bn last week, (+$6.4 bn in taxable, +$63 mn in munis). Extended outflows in equity funds is indicating a shift in risk appetite and perhaps fading seasonal benefits. MMFs inflowed +$9.6 bn for the current week compared to -$12.4 bn last week.
Equity ETFs outflow, bond ETFs inflowEquity ETFs (ex-commodities) continued to outflow with -$4.1 bn, versus -$7.4 bn last week. Commodity ETFs saw inflows +$286 mn for the current week, compared to outflows of -$218 mn last week. Inflows into bond ETF remained steady with +$871mn (+$852 mn in taxable bonds; +$19 mn in munis) versus +$973 mn last week.
Equity and fixed income fund performance
Softer equity market performance is driving the average 2Q-to-date asset-weighted equity fund performance for the group to -0.8% versus the S&P 500’s -0.4%. CNS continues to rank at the top with +2.9%, followed by IVZ with +0.8%. Average fixed income performance for the group is +1.5%, while the Barclays Aggregate Bond Index is +1.9% 2QTD. IVZ and LM lead with +2.9% and +2.2%, respectively, in FI performance.
2Q flow trend reflects declining risk appetite
Two-thirds of the way through 2Q11, flow trends so far reflect declining risk appetite, with a positive momentum in fixed income flows, at +$31 bn for 2Q to date versus +$17.3 bn in 1Q, and the best since 3Q10, driven by improved taxable bond flows, and slowing muni outflows. Equity funds on the other hand, are tracking lower qoq (+$0.5 bn, versus +$34.7 bn 1Q), led by outflows in US equity funds. ETFs emulate trends in the MF space, with a positive run-rate for bond ETF flows, while equity ETF flows track below 1Q levels.
And the latest complete Lipper data:
- For the third week in a row equity fund investors were net redeemers from their accounts, taking out approximately $5.6 billion for the week ended May 25, 2011. The three-week total now stands at -$12.7 billion, the worst figure for this group since August 2010.
- Taxable bond funds scarcely missed a beat as they accumulated another $3.8 billion this week despite a slowdown in corporate debt issuance that may squeeze good new opportunities ahead.
- The year’s belle of the ball, Loan Participation Funds, saw their inflows slow to less than $500 million as the market for bank loan funds softened for the third week.
- Municipal debt funds had outflows of about $300 million, an uptick from the previous week, but still better than its four-week moving average.
- The High Yield Muni category had inflows for the third week in a row as investors have eyed its nice yields and supportive market tone.
- Money market funds took in $10.7 billion as institutions added $11.3 billion and retail investors withdrew $600 million (to finance Memorial Day weekend activities?).
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Wow. So thats why the futes turned positive. I was a little confused. Thanks for the clarification.
That post goes well with the av.
The consensus is everyone seems to expect a mild correction now.
We probably already had it.
But most people i know are waiting for a correction in order to get back in.
My proprietary Dr. investment index still favors bonds over equity and is bullish on real estate. Remember Dr.s are usually contrary indicators.
None of these doctors have any gold or silver.
Lol as if the doctors weren't getting fleezed enough by the insurance companies the brokers get their peice too. Unbeleivable.
Have a good weekend everyone I can't watch this shit anymore. Its entirely too nice outside.
"
- The High Yield Muni category had inflows for the third week in a row as investors have eyed its nice yields and supportive market tone.
"
Obviously, somebody hasn't been listening to Whitney, have they? Hardly a flight to safety in my book!
Nasdaq in a great place for a sell entry
http://deadcatbouncing.blogspot.com/
ES futures now sitting at the very top of the down channel.
IWM outperforming SPY in pre-market.
Bears need to stop it cold right here, otherwise it is going to be a long summer watchining more retail and REIT stocks break out to new highs.
up and posting early out on the west coast are we robottrader? 5:40 am pct. guess you gotta get ready for another big day "deal(ing) daily with guys who approach my bank, seeking bank lines in the millions to invest in property flipping schemes, distressed debt, you name it ..."
if true, it must be nice to have a gig where you can read, trade and post at zh all day on your employer's dime.
either that or sit, dream and lie to perfect strangers to make yourself feel important.
you are one very bizarre dude.
btw: do you post at zh using your employer's system?
Robo will soon be gone faster than Kaiser Soze when the present FED pump is pulled from his beloved equity markets. *poof* and he's gone.
In a few weeks, the bulk of QE2 will have been "spent".
Don't forget last spring, when equities made their decisive turn down only a couple of weeks AFTER QE1 ended.
Tick tock.....
Right to the point Robo
We may be in a depressed.goldilocks.
Little growth. Little inflation.
A malaise that lasts for years if not another decade or two since we have little will to take the pain to solve it.
When should we be expecting the silver bear rant?
Shhh...don't tell CMG longs.
12.7 billion compared with 14022.8 billion (total market index) doesn't seem like anything to ruffle my feathers over. Do you have any idea what it costs to maintain feathers now a days?
seen AMG flows bond fund flows?
Fund holders would be wise to 'redeem' out now while the Bernank is still printing. When the 401K Bathrobe Brigades finally smell smoke and all try to sell in unison, the Bernank may not be feeling as generous.
Who got the money to push higher, when the margin debt is high ?
Right now theyre using the money of great-great-great-great grandkids to push NFLX higher.
where's the chart that was usually posted?
Equities are like those outer bank houses on stilts...and a Cat 5 is brewin' offshore
This is continued bad news for wall street and dc. the sheeple have wised up to the equities scam. twice burned thrice shy? Outflows will continue for decades as the boomers draw down their meager retirement to buy cat food and tp.
That's just the beauty of it - the sheeple NEVER wise up. They sold the lows in 2000 to buy real estate, and they sold stocks all the way up to buy bonds. Stocks are going to go up enough to make every seller look like a fool. Only when ZH starts posting that retail is BUYING will they collapse.
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