MUTUAL FUND INFLOWS SURGE AGAIN
18 June 2009 by Cullen Roche
3 Comments
As stocks have surged higher small investors have piled back into the market. The Investment Company Institute reports the 13th straight week of mutual fund inflows. Inflows totaled $12.5B with $5B of that going into equity mutual funds. This has proven to be a fairly reliable contrarian indicator during this bear market. The fact that small investors are increasing their stakes in stocks should be a red flag in the near term….







Is there a long or short term correlation between fund flows and market performance?
Capo,
They tend to have a negative correlation over the long-term. Predicting near-term movements with this data is no reliable, but large inflows have tended to precede periods of stock underperformance. More here: http://www.econ.yale.edu/~shiller/behfin/2005-04/frazzini-lamont.pdf
What is the units on the graph? Is it billion per month or per week?