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Investors pull cash from stock MF in sept at fastest pace of the yr & a few reads
Here's the full title for the 1st article - "Investors exit stock mutual funds in Sept at fastest pace of year; Bonds, ETFs hold appeal" - Yikes, more of the same ... Starting to wonder if they took all their money out three months ago and are now employing some sort of leverage? IMHO, if you're under 50 and saving for retirement, that's the wrong move. Of course, short-term anything can happen.
Reply to @hank: I think the thing that I find rather bizarre is that if people are leaving actively managed funds out of being tired or stressed by volatility and going to things like index ETFs. Yes, ETFs are cheaper, but I really don't think many retail investors are probably even aware of expense ratios. I guess I'm not getting the "average retail" mindset as to reasoning behind switching money to ETFs.
I continue to be amazed by how much money continues to go out of stock funds and into bonds.
Agree; and also to the point that those who (retail investors) are likely unaware of how many etf's have become daily trading vehicles for a lot of big money flows. I treat many etf's today as a proxy for those who may have been stock day-traders several years ago. Some etf's have options which may be placed against them. This ability really begins to stretch and/or modify price actions.
We may all be assured that big money will find and use whatever trading vehicle offers the best punch.
Reply to @scott: - "I guess I'm not getting the "average retail" mindset as to reasoning behind switching money to ETFs."
(1) Some investors are unloading equity mutual funds or shifting to bond funds. (2) Others are buying ETFs. Doesn't necessarily have to be the same investors. A lot of wage earners invest through company sponsored plans. Wonder if ETFs are an option in most? From what I've seen, the company usually selects one - or a couple - fund houses to sponsor and run their plan(s). Would guess this is where a lot of $$ is exiting. ETFs probably appeal more to those in self-directed plans, IRAs or taxable accounts. As you suggest, it takes a higher level of sophistication to discern their cost advantage. That likely resides in the second group.
Would love to see a detailed profile showing subsets of what we commonly term "average investors." Could be sorted by income, age, years with same employer, value of investments, vehicle used (IRA etc), and whether they own a home. Also, which fund companies are the biggest players in company plans?
Comments
I continue to be amazed by how much money continues to go out of stock funds and into bonds.
Agree; and also to the point that those who (retail investors) are likely unaware of how many etf's have become daily trading vehicles for a lot of big money flows.
I treat many etf's today as a proxy for those who may have been stock day-traders several years ago.
Some etf's have options which may be placed against them. This ability really begins to stretch and/or modify price actions.
We may all be assured that big money will find and use whatever trading vehicle offers the best punch.
Regards,
Catch
(1) Some investors are unloading equity mutual funds or shifting to bond funds. (2) Others are buying ETFs. Doesn't necessarily have to be the same investors. A lot of wage earners invest through company sponsored plans. Wonder if ETFs are an option in most? From what I've seen, the company usually selects one - or a couple - fund houses to sponsor and run their plan(s). Would guess this is where a lot of $$ is exiting. ETFs probably appeal more to those in self-directed plans, IRAs or taxable accounts. As you suggest, it takes a higher level of sophistication to discern their cost advantage. That likely resides in the second group.
Would love to see a detailed profile showing subsets of what we commonly term "average investors." Could be sorted by income, age, years with same employer, value of investments, vehicle used (IRA etc), and whether they own a home. Also, which fund companies are the biggest players in company plans?
Linked Article- Should 401K plans be reformed or replaced?
http://www.nytimes.com/2012/09/12/business/retirementspecial/should-the-401-k-be-reformed-or-replaced.html?pagewanted=all&_r=0