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Sixth Weekly High Yield Outflow Leads To New All Time Consecutive Redemption Record Of $4.6 Billion
Lipper/AMG has announced the most recent fund flow number: in the past week high yield funds saw a $310 million outflow, bringing total year to date flows to ($365) million. This is the sixth consecutive weekly outflow and brings total cumulative withdrawals for the period to $4.6 billion - a new all time record, even worse than the 2003 inactivity stretch. In percentage-of-assets terms this translates into 4.9%, the largest such figure in five years. And after running a $5 billion YTD surplus earlier in the year, this has all now been reversed. Elsewhere, inflows were seen in loans (+$95mn) and HG bonds (+1.2bn), whereas EM debt and developed equities saw outflows of $70mn and $2.8bn respectively. Money Markets continue to bleed, with $1.3 billion in outflow in the past week. So far in 2010 MMs have lost 13% of their entire asset base. The delta between MM outflows and all other risk asset inflow is now $113 billion.
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These fund flows are being spun, predictably, by fund company wholesalers as contrarian indicators: when retail gets out, time for "smart money" to get in. I disagree. I think the paradigm has shifted and the individual investor is fast losing faith in the overall system. They'll take years to woo back. Using fund flows as a contrarian indicator may have been helpful during the structural bull, but... we're not in a bull market (as we all know)
Also, people are cashing in funds in order to pay their fucking mortgages, so how's that a contrarian indicator?
Probably too much faith is being placed in the "bond fund" asset category, and that deserves attention by individuals. But the overall trend is ominous.
Thanks for providing this TD.
"They'll take years to woo back."
For the boomers as a whole, I do not think they will ever come back to equities in mass.
Japan will be next after Europe is my guess, then the rest of Asia will follow.
http://finance.yahoo.com/news/Japan-PM-warns-of-Greecelike-apf-420481783...
"Japan's new prime minister warned Friday that his country could face a financial mess like that of Greece if it did not deal urgently with its swelling national debt."
All those people believing in decoupling are in for one ass rude awakening. Unfortunately, the PM is misinformed, there is nothing to "deal" with. He has no solution and will not see a solution that he wants to hear.
"There is no out, there is only in"
The solution has been know from the beginning, collapse and liquidation. Nobody wants to hear that though.
"Explain it to me like I'm a 4 year old." Here you go Mako sometimes a video explains it easier.
http://www.youtube.com/watch?v=hM1x4RljmnE&feature=related