U.S. Mutual Fund Withdrawals a Record as Investors Choose Banks

U.S. Mutual Fund Withdrawals a Record as Investors Choose Banks

www.bloomberg.com

Oct. 9 (Bloomberg) -- Investors pulled a record $72 billion from U.S.-managed stock and bond mutual funds in September, seeking the safety of government-insured bank deposits as the financial crisis worsened.

Shareholders took $43.5 billion from stock funds last month and $28.8 billion from bond funds, according to data compiled by TrimTabs Investment Research in Sausalito, California. The exodus continued in the first week of October, with an additional $49.3 billion of outflows.

``People are scared,'' Conrad Gann, TrimTabs' chief operating officer, said in an interview. ``This market is different from what we've seen before.''

(visit the link for the full news article)

What can I say? No words can spin this headline.

Some analysts have declared this weeks sell off as a market crash; worst since 1937. Every sector has been sold off this week.

Friday is going to be ugly. As I said in another thread, don't be surprised if the Bank of England and the European Central Bank cut rates tomorrow.

www.bloomberg.com
(visit the link for the full news article)

the Turnover in the Funds usually translate into capital gains for those who can manage to keep fully invested in their managed fund.

see, ther is a fee that managers charge to the people who want major redemptions out of the fund.


i keep track of my fund and 2 similar funds, and i noticed a disproportionate decrease in the NAV (net asset value) when comparing these 3 funds head-to-head. The greater devaluation could not be only due to certain holdings, because all the funds i've seen have about the same companies in their Fund Portfolio.

one fund is $4bn large & decreased by $23 NAV
one fund is $1.5bn large, decreased by $12 NAV
my fund @ $.350bn has decreased only $16 NAV

the hidden element is the rush out of the fund with redemptions, and not the actual performance of the securities held.... hey, there's only a small universe of Gold & PM stocks to have in the fund portfolio, and
the hangers-on will benefit from the uncommitted investors who flee at the 1st sign of a market correction.


the banks & their MoneyMarket products which are now guaranteed by the government is causing a major displacement in the Fund & mutual fund landscape...
the Treasury Bills & bonds are also making an impact on the larger saver-investment landscape,

Both will probably dwell in a type of financial 'limbo' for several years as the stocks flux in the 7500-8000 range, and moneymarkets & treasuries only act as a 'haven' for the continuing losing value Dollar... so that after 3 years in 'Limbo' the $100k that was redeemed from the fund is then only worth $71k Tops!....



gotta end here, thanks...
oh, i corrected the from memory, NAVs

[edit on 9-10-2008 by St Udio]