The Great Rotation—Are investors finally turning back to stocks and away from bonds?

  • Posted on: 9 December 2015
  • By: admin

The following is an excerpt from our recent research piece, The Great Rotation--Are investors finally turning back to stocks and away from bonds, which can be found at http://pathlightinvestors.com/great-rotation%E2%80%94are-investors-finally-turning-back-stocks-and-away-bonds
 

Since the financial crisis of 2008, investor appetite for stock mutual funds has waned while bond funds have become all the rage. According to the Investment Company Institute, which tracks mutual fund flows, since June 2008, retail investors have withdrawn roughly $516 billion in assets from stock mutual funds and poured close to $1 trillion, $993 billion to be exact, into bond mutual funds. 

It hasn’t seemed to matter much that U.S. stocks have enjoyed strong performance since March 2009, with the S&P 500 up roughly 130% from March 5, 2009,through March 31, 2013. Retail investors simply didn’t want to own these risky assets for fear of another 2008-style meltdown. In fact, investors pulled roughly $290 billion out of stock mutual funds from March 2009 through December 2012.  But it would appear that something has changed, and retail investor anxiety over equities may be beginning to soften.