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678 Partners Mutual Fund Flows Blog


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With all the discussion of the V shaped recovery after looking at the first quarter of 2010 bond fund mutual flows are completely over taking equity mutual funds. 1) More and more baby boomers are retiring. 2) INvestors are chasing yield and safety. 3) Investors are not buying that the economy has recovered and are worried about the economic certainty. Now I am not going to get into a discussion about the dangers of Bond mutual funds and their expense(for another time) but this fact alone would suggest that the appetite for risk is still not so great. Last friday the DOW plunged below 10,000 again. Job numbers were disappointing and the GDP outlook is not looking so rosy specially after the issues in Europe and talking to small private US business\'s. As I said before long road ahead of us.

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678 Partners Mutual Fund Flows Blog

  1. 1. Mutual Fund Flows Amir Homayoun Rafizadeh the “Network Sommelier” How to reduce income tax's How to reduce estate tax liability Items not covered by Your current advisor
  2. 2. Mutual Fund Flows Big numbers in comparison to this last decade <ul><li>Both taxable & tax-exempt bonds </li></ul><ul><li>3 times more than 2001 recession </li></ul><ul><li>Investors fleeing to safety </li></ul><ul><li>Investors searching for yield </li></ul>
  3. 3. Net Fund Flows Equity Flows <ul><li>Lots of money leaving equity funds </li></ul><ul><li>Specially since September 2008 </li></ul>
  4. 4. Net Fund Flows Fixed Income Flows <ul><li>Some money leaving equity funds </li></ul><ul><li>Lots of money going into fixed income Funds </li></ul><ul><li>Still don’t seem a rush to equities </li></ul>
  5. 5. Comparing Stock & Bond Flows <ul><li>Since March 2008 bond flows have exceeded equity flows </li></ul><ul><li>Clearly investors are fleeing to safety </li></ul><ul><li>$40+ billion flows around September 09 </li></ul>
  6. 6. Extra caution with bond mutual funds <ul><li>Inflation outlook can take away purchasing power from fixed income investors </li></ul><ul><li>According to morning star 75% of mutual funds do not outperform their index </li></ul><ul><li>Beware of hidden mutual fund fees (specially bond funds) </li></ul><ul><li>Fear of double dip recession can really hurt long bond holders (5-7 years + maturity) </li></ul><ul><li>Research what you are buying </li></ul><ul><li>Don’t be afraid to ask questions </li></ul><ul><li>Talk to your advisor </li></ul>