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In Historic Anti-Equity Revulsion, Fidelity Now Manages More In Bonds And Money Markets Than Stocks

Tyler Durden's picture




 

It was inevitable. After demonstrating for years that week after week after week domestic equity mutual funds saw outflow after outflow which now amounts to a third of a trillion since 2010, regardless of how the policy vehicle known as the stock market, long since populated almost exclusively by vacuum tubes, performed and coupled with inflows into bonds, it was only a matter of time before this happened. This being the historic announcement by Fidelity that as of Wednesday bond and money market assets now total $848.9 billion, more than half of the company's $1.6 trillion in managed assets. Ford O'Neil, a top bond manager at Fidelity, underscored the milestone on Wednesday during a media presentation in Boston. "The rise of bond and money market funds, including institutional assets, is a remarkable turn of events for Fidelity. The company built an empire in the 1980s and 1990s on stock funds and star stockpickers like Peter Lynch. Fidelity's stock mutual funds held $761 billion at the end of June... The rise of bond and money market funds, including institutional assets, is a remarkable turn of events for Fidelity. The company built an empire in the 1980s and 1990s on stock funds and star stockpickers like Peter Lynch. Fidelity's stock mutual funds held $761 billion at the end of June." So much for the empire that Peter Lynch built. Luckily we all know whom to thank - a certain Princetonian central planner who would make the 1954 Stalingrad politburo blush with envy.

From Reuters:

At Fidelity, bond funds this year have attracted $18.3 billion in net flows from customers. Meanwhile, Fidelity stock funds have experienced net outflows of $3.6 billion, according to Lipper Inc, a Thomson Reuters company.

 

"Most people haven't made money in the stock market in the last decade plus," said Sonu Kalra, who manages the $15.4 billion Fidelity Blue Chip Growth Fund.

 

When asked by a reporter how he felt about the emergence of bond funds at Fidelity, Kalra smiled and said, "We're all one big happy family here."

 

While Fidelity stock fund managers in Boston say that the current starting point for investing in equities couldn't be better, the company's bond operation in New Hampshire is still attracting billions of dollars in new customer money.

 

O'Neil said the bull market for bonds was supposed to be over a long time ago. But that hasn't happened. Not yet, anyway.

 

"Believe it or not, it's been another good year," O'Neil said. "I was told you couldn't have another good year after 2009."

 

...

 

Sitting nearby, Kalra made the case for investing in a stock market that may be on the verge of a prolonged upswing, if you see opportunity in the S&P 500 Index's price-to-earnings ratio, which is at a historic low.

 

And in 2012, Kalra's fund has attracted estimated net inflows of $250 million amid a year-to-date return of 18.93 percent that has outperformed the 16.8 percent rise on the Russell 1000 Growth Index, according to Lipper. The fund's outflows were $580 million last year, $277 million in 2010 and $795 million in 2009, according to Lipper.

 

Lisa Emsbo-Mattingly, director of research for Fidelity's global asset allocation, said in 1999 the investor psychology was, "Own equities, forget the bond guys, that's for suckers."

And owning gold which is up a few thousand percent since then was, of course, for tinfoil crazy moonbats operating out of bomb shelters. Oh how on a long enough timeline all the vacuous idiots are exposed...

Visually, here is what it all means:

In the meantime, here is what happened in the week QE3 was announced - from ICI:

In short: a $4.8 billion outflow in the week Bernanke promised to never let stocks drop. It was the largest outflow since May. There has not been a single inflow into equities since QE3 was either hinted or formally announced.

Total central-planning failure.

 

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Thu, 09/27/2012 - 10:40 | 2835352 Ruffcut
Ruffcut's picture

Somebody has trust issues.

Thu, 09/27/2012 - 10:51 | 2835382 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I couldn't have put it better.

The logic of the retail investor is as follows:  Stocks are risky, bonds are safe, and dollars are money.  I can use the money to buy all my dreams now that I am retired and in the meantime I will collect a return, however slight, on my bonds, while staying out of that pesky stock market that will drop any day now, just like it always has dropped just as soon as I got my hopes up.

What their stockbroker doesn't tell them (because as long as he is selling them something he doesn't care) is that bonds are overbought and when rates rise, which they will, a 2% rise in rates will take the price of the their bonds down 28%.

Dollars are constantly losing to inflation and have not come close to defining money since 1933.  Money must "store wealth".  When the underlying investment is losing its wealth to inflation it is obviously not storing it.  Not to mention the underlying value, the intrinsic value of a piece of paper that acts as an IOU on the debt of the US, is zero.

But Americans don't know this and even the ones that do could care less.  They know their empire is built on sand and is a pile of dirt but they like their dirt pile dammit!  So they will take their RMDs, keep 1/3 of their IRAs in bonds, 1/3 in stocks, and 1/3 in cash, own no gold, buy new cars, houses (because housing is baack baby!), and slug through life like worms on a turnpike.

Thu, 09/27/2012 - 10:52 | 2835398 IridiumRebel
IridiumRebel's picture

"slug through life like worms on a turnpike."

 

-awesome

Thu, 09/27/2012 - 12:12 | 2835661 NotApplicable
NotApplicable's picture

Behold the power of the almighty ZIRP!

Who said pigs can't fly?

Thu, 09/27/2012 - 10:57 | 2835413 Vincent Vega
Vincent Vega's picture

I've had a long running conversation with a friend who has his money in a bond fund because he doesn't want to be 'at risk'. I've explained bonds to him repeatedly but he can not get past the 'fixed income' part of bonds. He continues to equate fixed income to fixed price or quaranteed return. He refuses to accept the fact that bonds can go up and down in price. So yes, the bond investing sheep will be slaughtered.

Thu, 09/27/2012 - 11:18 | 2835472 Debtonation
Debtonation's picture

Only sheep buy high and sell low.  He'll get his fixed income, it just won't be worth anything.

Thu, 09/27/2012 - 13:07 | 2835892 midtowng
midtowng's picture

His confusion is based on the fact that he's in a bond FUND, instead of actually owning the bonds.

Thu, 09/27/2012 - 10:48 | 2835387 Dr. Richard Head
Dr. Richard Head's picture

Shouldn't the fib-retacement of the S&P start right about now?  Chop licking fun.

Thu, 09/27/2012 - 10:53 | 2835403 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And thus probably why Bernanke has $85B loaded ready to fractionally reserve then rehypothecate.

Thu, 09/27/2012 - 12:14 | 2835668 NotApplicable
NotApplicable's picture

Honestly, it makes meth seem like a rational option. Long timelines do not bode well for any except perhaps the bankster/politico class.

 

Thu, 09/27/2012 - 11:57 | 2835612 Quinvarius
Quinvarius's picture

The S&P and DOW are both in full on breakout mode.  This week is the restest of the breakouts.  Printing money does matter.  I am saying nothing about the economy.  All I am saying is good luck trying to get stocks to sell off when bank traders get unlimited 0% credit and can't ever miss a margin call.  No limit on bank funding = no bank panic = no market crash.

Thu, 09/27/2012 - 10:40 | 2835353 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The American people are geniuses....

Thu, 09/27/2012 - 10:48 | 2835383 kaiserhoff
kaiserhoff's picture

Roh, Roh.  The suckers always rush into the shit storm.

Thu, 09/27/2012 - 10:52 | 2835400 Dr. Richard Head
Dr. Richard Head's picture

The plebes run into poop rated bonds and then rush into MMA that have had the government deny the right of redemption of those acocunts.  Sounds like a great fucking plan.  Well punch me in the dick they are geniuses. 

http://www.zerohedge.com/news/government-your-legal-right-redeem-your-money-market-account-has-been-denied-sequel

Thu, 09/27/2012 - 11:38 | 2835546 Ruffcut
Ruffcut's picture

"The suckers always rush into the shit storm."

Hell, my shit storms are delivered free.

Thu, 09/27/2012 - 10:44 | 2835370 LawsofPhysics
LawsofPhysics's picture

That is a lot of paper promises.

Thu, 09/27/2012 - 11:47 | 2835575 Ruffcut
Ruffcut's picture

Actually it is acquisition.

Even if the horseshit is worth 20 cents on a dollar with money they created out of thin air.

Do you honestly think these wanker bankers are stoopid?

"Potter is not selling. Potter's BUYING!"

It's all about ownership. THe muni's, stocks, bonds, real estate and even the promises.

Thu, 09/27/2012 - 10:46 | 2835379 CvlDobd
CvlDobd's picture

I just bought some Fidelity bond funds and would like to store my physical shares in the Barclays vault.

Thu, 09/27/2012 - 10:48 | 2835385 semperfi
semperfi's picture

Ben + Barak = New Soviet Union

Thu, 09/27/2012 - 10:53 | 2835404 kaiserhoff
kaiserhoff's picture

of the parasites, by the parasites, and for the parasites.

Thu, 09/27/2012 - 10:55 | 2835410 LawsofPhysics
LawsofPhysics's picture

where parasite=any paper pushing fucknut.

Thu, 09/27/2012 - 10:52 | 2835401 Dr. Engali
Dr. Engali's picture

Like sheep being led to the slaughter house the "investors" are going to get killed when this bubble explodes.

Thu, 09/27/2012 - 10:54 | 2835406 youngman
youngman's picture

all the retail investor cares about is the 2% return.....he does not care of the price of the bond..to bad...because it does matter.....what is funny is the fiscal cliff will take a lot of this income away....

Thu, 09/27/2012 - 11:12 | 2835416 kevinearick
kevinearick's picture

The underlying bonds aren't worth any more than the stocks. it's all paper, now depending ou the Court's definition of a corporation, which depends on admiralty. ben is done, and so are all three branches of the us government.

albert einstein, like ben franklin before him, was an insecure thieving patent office copy boy. the us navy is like the spoiled rich kid on the block, who has to have the latest and greatest toy, to rub it in the faces of all the other kids. china wnnabee politicians are presenting a used soviet flattop as a threat. yea, bring your gold to the party.

where do you suppose technology comes from, the spoiled brats in middle class and capital that were given an A at stanford? the middle class employed technology for capital to drive down labor return to 15%. now, it's going to byte them in the ass, like it always does, upon reversion, when labor drops the load on the back of the middle class, which takes legacy capital down with it.

Thu, 09/27/2012 - 10:59 | 2835426 Ckierst1
Ckierst1's picture

Perhaps the only investors left in the stock market ARE irrational!

Thu, 09/27/2012 - 11:03 | 2835433 IridiumRebel
IridiumRebel's picture

I'm a tinfoil crazy moonbat, Bitchez.

Thu, 09/27/2012 - 16:26 | 2836643 Mr. Fix
Mr. Fix's picture

We're waiting for you.

 

:)

Thu, 09/27/2012 - 11:04 | 2835435 buzzsaw99
buzzsaw99's picture

next up outflows in stocks AND bonds

Thu, 09/27/2012 - 11:04 | 2835436 youngman
youngman's picture

I wonder who is left too....we all know all the hedgies owned Facebook.....and have alot of Apple....and quite a few idiots own GLD and SLV....

Thu, 09/27/2012 - 11:09 | 2835450 fonzannoon
fonzannoon's picture

cnbc loves ripping you guys off

Thu, 09/27/2012 - 11:12 | 2835454 Mitch Comestein
Mitch Comestein's picture

Someone is buying the stocks.  My guess would be the ultra wealthy.

Thu, 09/27/2012 - 11:18 | 2835475 virgilcaine
virgilcaine's picture

It's a "stock pickers market" though... he he he

Thu, 09/27/2012 - 11:19 | 2835484 davinci7_gis
davinci7_gis's picture

When inflation hits...stocks and gold are going to be the things to be in!

Thu, 09/27/2012 - 11:26 | 2835513 WhiteNight123129
WhiteNight123129's picture

When inflation start to build in, long maturity Treasury strips will get wacked....When inflation lowers debt to GDP from people selling their bonds to spend them (Rich people) and corporation to do capex instead of sitting idly on cash. Circulation will rise in proportion to finanical assets (debt and equities, which are derivatives of the circulation).

 

Thu, 09/27/2012 - 11:21 | 2835489 csmith
csmith's picture

16% of the Fidelity Blue Chip Growth Fund:

AAPL 11% + GOOG 5%

Thu, 09/27/2012 - 11:22 | 2835496 WhiteNight123129
WhiteNight123129's picture

SHort the 30 years strip. In 1980 nobody wanted a 14% yield on treasuries and everyone was in Gold.... Idiocy repeated ad infinitum....

 

Thu, 09/27/2012 - 11:27 | 2835503 Lost Wages
Lost Wages's picture

For the people ripping on bond investors, imagine your 401K only offers a choice of about 20 mutual funds. Your money is trapped until you lose your job. Your choices are: Large, mid and small cap stocks. An REIT fund. Three different bond funds with varying amounts of treasuries, corporate and mortgage bonds. A TIPS fund. A "managed cash" fund filled with ABS or whatever, slightly more risky than a money market and stays at $1=$1. Then there is Pimco Total Return fund with whatever garbage Bill Gross decides to fill it with on any given day. Are you still going to rip on bond investors? Or should they just get into the riskiest small cap stock fund and hope for the best, because either way they're going to lose it? It seems to me like Ben has to keep interest rates low or the whole ponzi scheme collapses, but if stocks crash they can rebound from that. If bond yields go up, it's over anyway. Done. If they want to take the bond investors down, doesn't the whole ship go down with them?

Thu, 09/27/2012 - 11:43 | 2835565 cabtrom
cabtrom's picture

Sooo, who the hell IS buying stocks & how can boomers retire with no return? I'm confused. Are we just gonna tel 75 million geezers "tough shit" because the powers that be know they are to old to do a damn thing about it? This is kinda creepy. Ok, so if I finally get my first job and decide to put away 6-10% for "retirement" just where exactly do I store my pieces of paper? HELP!

Thu, 09/27/2012 - 11:51 | 2835588 WhiteNight123129
WhiteNight123129's picture

Ok, FAO-OECD says we need 60% more units of food with only 5% more arable land available, when the bonds start to be sold to finally be spent, watch for price of soft commodities, buy Gallium, Tellurium, Germanium, Indium, some Silver and bit of Gold and a few large cap stocks, if you want super charged fixed income you better buy Tobacco shares, dividend hyper stable higher yields, but reprices inflation (Always) and do quite ok in deflation (check Japan Tobacco in hte last 20 years).

 

 

Thu, 09/27/2012 - 11:51 | 2835590 Quinvarius
Quinvarius's picture

You gotta buy it.  12 million Zimbabweans can't be wrong.

Thu, 09/27/2012 - 12:12 | 2835663 Red Heeler
Red Heeler's picture

"If all the economists in the world were laid end to end, it wouldn't be a bad thing." - Peter Lynch

Thu, 09/27/2012 - 12:27 | 2835730 lemarche
lemarche's picture

This tells me that we are NEAR the END of the BEAR market started in 2000...

Thu, 09/27/2012 - 13:21 | 2835955 Tortuga
Tortuga's picture

Lady on the Drudge Report:

"Course I'm gonna revote for Obama. He got me this FREE cell phone and next year, he gon git me some more FREE stuff".

Change IS coming.

Calling Jamie, ask your boss to help us.

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