Last week, investor fund flows into money market funds hit an 18-month high of $33.5 billion, according to flow-tracker EPFR global.Investors also added a net $3.64 billion to their bond fund holdings, and fled stocks to the tune of $11.25 billion.
As investors lose faith in stocks once again, and U.S. treasury yields are historically low, pulling down corporate bond yields with them, soaring fund flows for money market investments, which earn next to nothing, to us signal a complete lack of conviction in anything right now. Even gold is suspected by many to be over-hyped right now.
Thus to many, nothing is remotely obvious as a ‘decent’ investment these days, after three years of investment paradigm destruction. People are now rushing to essentially hold cash and earn nothing, in the form of money market funds.