Risk-Adverse Investors Sell Stock Mutual Funds
Investors withdrew nearly $8 billion from U.S. stock mutual funds in June, according to Strategic Insight, a New York City mutual fund research and consulting group, which reports that assets held in U.S. stock mutual funds have declined by more than 15 percent since the beginning of the year.
“For many fund shareholders, risk aversion will persist as a theme in the face of volatility,” Avi Nachman, director of research for Strategic Insight, said in a statement. “Gains in the stock market have not emboldened investors, who worry about the ever-present risk of future losses.”
Stock mutual funds have experience four consecutive months of outflows, according to Strategic Insight, despite recent gains in the S&P 500 index, which rose 4.1 percent in June. In the face of market uncertainty and volatility, Main Street investors are unlikely to assume significant risk, according to a survey conducted by Millionaire Corner in June.
Total stock and bond mutual fund investment was $13 billion in June, representing the smallest investment in long-term mutual funds since December, according to Strategic Insight. Investment in bond funds rose more than 15 percent, with taxable bond funds increasing roughly 11 percent to more than $2.3 trillion and investment in tax-free bonds rising by more than 4 percent to $634 billion. International stock funds rose by 5.4 percent to nearly $1.6 trillion. The data excludes exchange-traded funds, or ETFs, and mutual funds linked to variable annuity products.
“When we look at the first half of 2012, we see much of what should be expected in the second half,” Nachmany said. “Given the Federal Reserve’s current commitment to low interest rates and the lack of positive surprises in U.S. economic figures, we anticipate investors will continue to favor the relatively lower risk of bond funds over equity funds in coming months.”
Meanwhile ETFs enjoyed solid growth in June, taking in $16 billion, according to a separate Strategic Insights study, which notes that an increase of $75 billion in assets for the first half of 2012 puts U.S. ETFs on pace for their sixth consecutive year of $100 billion-plus inflows. Millionaire Corner research shows that ETFs have the most appeal among wealthy investors.
U.S. ETN and ETF assets stood at $1.18 trillion at the end of June, up from $1.06 trillion at year end, according to Strategic Insights. ETF investors show the most preference for large-cap blend, intermediate-term bond, large-cap growth, long-term bond and diversified emerging market funds.
Source: http://www.millionairecorner.com/article/risk-adverse-investors-sell-stock-mutual-funds