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U.S. Investors Overwhelmingly Favor Bond Funds Over Stock Funds

https://www.thinkadvisor.com/2019/11/21/u-s-investors-overwhelmingly-favor-bond-funds-over-stock-funds/?slreturn=20191023064334

U.S. Investors Overwhelmingly Favor Bond Funds Over Stock Funds

Despite a stock market hitting record highs throughout the year and bond yields remaining near historically low levels, U.S. investors continue to favor bond and money market funds over equity funds, especially actively managed stock funds.



Probably only short term...long term need mixed

Comments

  • "More specifically, demand for actively managed equity funds isn’t there. They experienced more than $204 billion in net outflows for the one year ended Oct. 31, while passive equity funds had net inflows of $222.3 billion."

    The index fund/ETF effect.
    David

  • edited November 24
    The article references a M* report saying mutual fund investors have been moving money from equity funds to bond funds. Question: Do mutual fund investors comprise the major portion of U.S. investors? I’m thinking that as a group they’re more representative of small and mid-level investors. So the study may be overstating the magnitude of the move into bond funds by U.S. investors as a whole.

    There can be many reasons (both logical and illogical) why smaller and mid-level investors who invest in mutual funds are moving their assets. Aging population is the first to come to mind, A misconception that bond funds are somehow inherently safer than equity funds is the second. Some are. Some aren’t. A lot depends on credit risk, rate risk and duration risk.

    There are a growing number of skeptics, myself included, who surmise we’re in the midst of an “everything bubble.” That bubble would encompass both stocks and bonds - and to some degree real estate and collectibles. If that’s the case, the role of central bankers in driving interest rates to historic lows is paramount.

    All of the above is conjecture. I don’t have the full answer. But neither do I find M*’s analysis of the big picture complete, compelling or particularly incisive. In fact, one might argue that the typical mutual fund investor is often quite clueless.
  • "one might argue that the typical mutual fund investor is often quite clueless"

    @hank- If I'm any example, that's certainly true.
  • edited November 24
    Old_Joe said:

    "one might argue that the typical mutual fund investor is often quite clueless"

    @hank- If I'm any example, that's certainly true.

    Not Fair!. The reference was to the 90%+ who own funds and don’t partake of mfo for one reason or another. :)
  • Good balance funds such as TRP Cap App or Vanguard Wellesley Income funds help to make the bond allocation much easier.
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