October 30, 2013

Equities See Largest Inflow Since 2000

TrimTabs says October was fifth-biggest month on record

Traders at the New York Stock Exchange. (Photo: AP) Traders at the New York Stock Exchange. (Photo: AP)

Investors really love equities, or maybe it’s simply that — like Zack Mayo — they have nowhere else to go.

TrimTabs Investment Research reported on Tuesday that all equity mutual funds and exchange-traded funds have received net inflows of $45.5 billion in October through last Friday. This month’s inflow is the fifth-highest in any month on record.

Comparing the equity rush to Silicon Valley’s bestowal of multibillion-dollar valuations on technology outfits that had neither revenue nor profits, David Santschi, CEO of TrimTabs, said investors were piling into equity funds at the fastest rate since the technology stock bubble popped in 2000.

“This year’s inflow of $277 billion into all equity funds is the biggest since the inflow of $324 billion in all of 2000,” he said in a statement.

In an accompanying research note, TrimTabs explained that 3 of the 10 largest monthly inflows into equity funds have occurred this year.  The inflows of $66.3 billion in January and $55.3 billion in July were the biggest monthly inflows on record.

“All but three of the ten largest monthly inflows into equity funds occurred in 2000 or 2013,” said Santschi. “Such strong enthusiasm among fund investors should make contrarians nervous.”

TrimTabs also reported that the bond bloodletting continues, with bond funds posting redemptions for the fifth consecutive month.  Bond mutual funds and ETFs have redeemed $17.8 billion in October, lifting the total outflow in the past five months to $140.6 billion.

“These outflows mark a huge shift for the fixed-income world,” Santschi said.  “Not since late 2003 have bond funds posted five monthly outflows in a row.”

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Check out Bond Fund Bloodletting Continues in August on ThinkAdvisor.

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