Investors have turned cautionary even as the raw numbers in the stock market are urging them to buy. Major market indexes went up to their record highs during the first quarter. The Dow Jones Industrial Average (DJIA) rose first to a record a little above 20000 and afterward, over 21000. This has the result of the standard diversified stock fund clocking a healthy return of 4.8 percent. Investors, however, are exhibiting caution. They have put their money on the tried and tested bond funds, as the fund flow statistics show.
It is estimated that almost $112 billion went to exchange traded funds and mutual funds which invest in bonds, based as per data collected by Investment Company Institute. In contrast, approximately $34.5 billion went to the American stock funds in this quarter. According to Charlie Reinhard of New York based MainStay Investments, this kind of measured reaction shows that the investors are trying to understand the world in a much more balanced manner. He said that they are being careful and cautious.
All gains in American stock funds, tracked by the specialist Thomson Reuters Lipper, broadly followed the market. The S&P 500 index went up by 5.5 percent and the Dow made a progress of 4.6 percent.
This is a much more different scenario compared to 2016 end, post the presidential election. The money flow, at that time, flowed towards stock funds. Money exited bonds then assuming that the Trump administration will bring a more robust economy. It was also believed that the interest rates will go higher. The yearning for stocks were not as great as it once was, and the Federal Reserve has also reduced its portfolio of Treasury and Mortgage securities.
According to Reinhard, the first quarter was extremely good. The quarter ended extremely near to highs. This happened even though the Trump administration suffered a setback when it came to repealing the Obama crafted healthcare law. Even though surface gains could be made, there was little rotation away “reflation” trade of Obama. When it comes to rest of year, it is estimated that gains will not be as bountiful as this in first quarter. Biotech and healthcare firm went up by 10.9 percent in this quarter, post the bill concerning healthcare bill was generated. The gold oriented funds went up by 9.9 percent. It was left behind by Latin American funds, themselves up by 13.1 percent.