Wednesday, April 4, 2012

Mutual Fund Net Inflows & Capital Gains

Over the past 36 months through February, net inflows into bond mutual funds totaled $1.0 trillion, while net inflows into equity funds were close to zero. Unfortunately for bond investors, the equity funds enjoyed capital gains of $2.7 trillion over this period, while the bond funds had gains of only $437 billion. Now that bond yields are starting to move higher, those gains are likely to decline. That might convince individual investors to move back into equities.

TODAY’S BULLET POINTS: (1) When good news is not bad. (2) Twisted Fed policy. (3) Consumers and businesses are loaded with liquidity. (4) Banks holding record $3.34 trillion in cash, Treasuries, and Agencies! (5) Do we really need more QE? (6) A classic liquidity trap? Not! (7) Monetary policy is really fiscal policy. (8) FSMI still bullish. (9) Warm weather slows railcar loadings of coal. (10) Railcar loadings of autos at cyclical high.  (More for subscribers.)

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