While bond funds posted an estimated inflow of $16.1 billion on the first nine trading days of June, all equity funds posted an estimated outflow of $2.1 billion.
According to the TrimTabs Weekly Liquidity Report, investors continue to favor bond funds over equity funds with $16.1 billion headed to fixed income managers versus a loss of $2 billion across the universe of equity funds. This despite the massive 40% rally in the stock market.
This is interesting to me because income was the last thing investors wanted out of stocks, with higher-quality dividend paying shares drastically underperforming the lower-quality non-payers since the bottom in March.
This may be a bit too much of an extrapolation, but one could deduce that the typical buyers of “blue chip stocks” (if there even are such things anymore) have decided to get their yield away from common stocks.
Anecdotally, over the last month I’ve had a surprising amount of corporate bond inquiries from customers that I’ve typically only done stock biz with, as the Fed’s cash-is-trash program works it’s mojo.
My takeaway is to respect the money flows above all else in this (and every other) environment.
Full Disclosure: My commentary above is strictly a recap of publicly available data, not an endorsement of any particular investment product or style. Please see my Terms & Conditions page for a full disclaimer.