Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a652731

Equity inflows surge to multi-year high, but can it last?

by David Campbell on Jan 29, 2013 at 08:12

Of the $24.7 million total inflows into mutual funds tracked by the US Investment Company Institute in the first week of the year, $14.8 billion was allocated to equity, versus $9.76 million into bonds.

Five-year high

Similarly, funds analyst EPFR Global reported that equity fund flows had hit a five-year high in the first week of January, and retail investment hit its highest level since the third quarter of 2009.

As an aside, there was also good news for active managers, with equity inflows at their highest since EPFR began tracking in 2000.

This rebalancing, if continued, could be a powerful tide. According to Lipper, there remains $1.78 trillion in US money market funds alone, versus $2.23 trillion held in US-registered equity funds.

Reasons to be cautious

At least in the US, there are some reasons to be cautious, however.

Biderman points out that dividend payments bought forward to the end of 2012 to avoid higher taxes provided a natural one-off boost to investors who may well have simply reinvested their windfalls.

‘I estimate that at least $100 billion in extra income was recognised in late 2012. And that is the source of new cash for investments so far this year,’ he said.  

‘Q4 2012 income was up $60 billion as a result of the front running of bonuses and the like and about $40 billion came from the sale of stock and other assets before year end.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet