Investor fund flows have been pouring out of U.S. equities for a couple years now, and have continued to do so based on fund flow data year-to-date.
An AP-CNBC poll making the rounds today also describes how the majority of investors still don’t trust the stock market. This makes perfect sense from a psychological perspective since investors were just burned by the stock market quite badly.
Yet what makes the psychological state of investors appear rather schizophrenic is how investors have already forgiven Real Estate Investment Trusts (REITs).
$1.42 billion has flowed into U.S. real estate-related mutual funds year-to-date as of July according to a Deutsche Bank report via Business Week. Over the same period, $27.1 billion has continued to flow out of U.S. stock funds.
One explanation is that investors are chasing the perceived safety of yield. As we highlighted a week ago, “according to the Financial Times, the spread between U.S. treasuries and commercial real estate yields is as wide as it was during parts of the recent financial crisis.”
Another explanation is that investors have noticed how housing prices are the most politically-correct asset price to support with government money.
Either way, the market has forgiven U.S. real estate extremely fast, while the U.S. stock market remains forced to sleep on the couch.
Business Insider Emails & Alerts
Site highlights each day to your inbox.