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.
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.