Citi’s William R. Katz takes a long look at the state of the retail mutual fund industry, and he notes that while there’s been some improvement lately, the state of the market is indeed very grim.
Worst equities MF flow recovery in a decade – First, the good news. Retail equities flows seem to be favourably inflecting since the 9/11 recent market trough, with a combined $6B inflows over past 5+ months. Now the bad news. The recovery is lagging prior market troughs (median +6M recovery is $35B, led by $68B in six months following the 2/9 GFC bottom). Moreover, organic growth over ST/LT post market bottom recoveries continues to slow, suggesting some investor cumulative fatigue that may imply “this time might be different” – or perhaps temper the amplitude of successive recoveries.
The report though includes a chart that’s almost amazing.
It notes that at the very top of the tech bubble in 2000, a noted value manager launched an exclusive tech fund.
Now it notes that a major equity fund is getting into the global fixed income gain.
It’s almost beautiful, except that the overlays compares the NASDAQ with cumulative bond inflows, which is kind of a lame comparison, since one is an index, and one is just a big pile of cash. Perhaps if the bond one were some kind of price index, or perhaps even the inverse of the 10-year Treasury it might have looked better.
Still though, just as a history lesson, that’s kind of fascinating about the tech fund launched in 2000.