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.It's fitting that the previous record was set in 2000, right at the top of the dotcom bubble.
“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.”
Mike "Mish" Shedlock