Fund Flow Records Smashed: Equity Funds Get Record $352 Billion Inflow, Bond Funds Lose Record $86 Billion

In yet another example of the extreme bubble optimism regarding equities, Trim Tabs reports (via email), Fund Flow Records Smashed Across the Board in 2013.

TrimTabs Investment Research reported today that U.S.-listed equity mutual funds and exchange-traded funds took in a record $352 billion in 2013, smashing the previous record inflow of $324 billion in 2000.  Meanwhile, U.S.-listed bond mutual funds and exchange-traded funds redeemed a record $86 billion, topping the previous record outflow of $62 billion in 1994.

“The Fed finally succeeded last year in its long-running campaign to coax fund investors to speculate,” said David Santschi, Chief Executive Officer of TrimTabs.  “The ‘great rotation’ that some market strategists long anticipated is under way.”

In a note to clients, TrimTabs explained that U.S. equity mutual funds and exchange-traded funds received $156 billion in 2013, the first inflow since 2007 and the biggest inflow since the record inflow of $274 billion in 2000.  Global equity mutual funds and exchange-traded funds received $195 billion, edging past the previous record inflow of $183 billion in 2006.

“Retail investors are particularly enthusiastic about non-U.S. stocks, which should make contrarians wary,” said Santschi. “Global equity mutual funds took in $137 billion last year, which was more than seven times the inflow of $18 billion into U.S. equity mutual funds.  These highly disproportionate inflows occurred even though non-U.S. stocks as a whole badly lagged U.S. stocks.”

TrimTabs also reported that bond mutual funds and exchange-traded funds redeemed $86 billion last year, the first outflow since 2004 and the biggest outflow on record, surpassing the previous record outflow of $62 billion in 1994.

“Bond funds have suffered seven consecutive months of redemptions for the first time since late 1999 and early 2000,” noted Santschi.  “Nevertheless, the outflow of $196 billion in the past seven months reverses just a fraction of the inflow of $1.20 trillion from 2009 through 2012.”

It's fitting that the previous record was set in 2000, right at the top of the dotcom bubble.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com