Stock Funds Losing Money in 2012, But S & P Up 15%?

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NateW
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Stock Funds Losing Money in 2012, But S & P Up 15%?

Post by NateW » Thu Sep 27, 2012 11:32 am

For weeks I have been seeing articles on Money.com about stock mutual funds bleeding cash. Today I read, "The week's retreat brings the 2012 outflow total to nearly $87 billion." But stocks have been a really great investment this year, on average. The S & P returned 15% year to date. What gives? My guess is all the reported outflows are meaningless in the big scheme of things.

--Nate

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Toons
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Re: Stock Funds Losing Money in 2012, But S & P Up 15%?

Post by Toons » Thu Sep 27, 2012 11:33 am

"My guess is all the reported outflows are meaningless in the big scheme of things."

You hit the Nail on the head. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

YDNAL
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Re: Stock Funds Losing Money in 2012, But S & P Up 15%?

Post by YDNAL » Thu Sep 27, 2012 11:45 am

NateW wrote:For weeks I have been seeing articles on Money.com about stock mutual funds bleeding cash. Today I read, "The week's retreat brings the 2012 outflow total to nearly $87 billion." But stocks have been a really great investment this year, on average. The S & P returned 15% year to date. What gives? My guess is all the reported outflows are meaningless in the big scheme of things.

--Nate
This perhaps makes too much sense and it may be 100% wrong:
  • What do traders typically do?... book gains.

    What do buy/hold/rebalance investors typically do?.... rebalance.

    In either case, money flows out of investments with large(r) gains.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

letsgobobby
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Re: Stock Funds Losing Money in 2012, But S & P Up 15%?

Post by letsgobobby » Thu Sep 27, 2012 1:00 pm

I also saw data (I think in Barrons) that equity ETFs have also seen a net outflow all year until recently. If true, that would argue against either of the above explanations as being correct. It might lend strength to DALBAR's findings that investors typically chase returns and are late to the party.

On the other hand, it is true that net flows are pretty small relative to total holdings, so it is possible the data means nothing.

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ofcmetz
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Re: Stock Funds Losing Money in 2012, But S & P Up 15%?

Post by ofcmetz » Thu Sep 27, 2012 4:21 pm

NateW wrote:For weeks I have been seeing articles on Money.com about stock mutual funds bleeding cash. Today I read, "The week's retreat brings the 2012 outflow total to nearly $87 billion." But stocks have been a really great investment this year, on average. The S & P returned 15% year to date. What gives? My guess is all the reported outflows are meaningless in the big scheme of things.

--Nate
Can't a guy sell some stocks without making headlines. :annoyed

The WSJ had an article on this today. Basically it said the same thing you did. Bond and Hybrid funds are experiencing gains, while stock funds experience net losses. It makes me think that some people are selling what is up, and at the same time some people are still equity shy and have missed out on recent returns..
Never underestimate the power of the force of low cost index funds.

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