Investors Rotating Cash from Bonds to Stocks
$DIA, $SPY, $QQQ
US-based stock funds pulled in $11.8-B in the week ended 28 December data showed Thursday, ending Y 2016 with an penchant for stocks that had been seen for the better part of the year.
Investors pulled $775-M from taxable bond mutual funds and exchange-traded funds during the same frame, marking the 3rd week running of withdrawals, the data showed.
Stocks have rallied on the notion for lower US corporate taxes and fewer regulations, after the November 8 election gave Republicans who support those policies control of the Presidency and the US Congress.
President Elect Donald Trump will take office on 20 January
This past week’s stock fund inflows and bond withdrawals mark a sharp departure from most of Y 2016.
The data show only 12 weeks this year when stock funds netted cash, compared to 32 weeks for taxable bond funds.
Government spending expected under the incoming administration could spark inflation and depress bond prices.
As such, fund investors have been reluctant to abandon bonds altogether.
Mutual funds are seen to reflect retail investors’ moves, while ETFs represent a range of investors, including institutions such as hedge funds.
Best Wishes for a Happy and Prosperous New Year.