Despite Record Stock Highs Stock Funds See Exodus

U.S. stock markets may be continuing their slog higher, hitting fresh record highs this week, but retail investors have decided to lighten their load with equity funds seeing the first outflows since the start of 2014, according to new data.
U.S.-based stock mutual funds – which exclude exchange-traded funds – saw net outflows of $1.7 billion in the week ending July 2, according to research tracker Lipper on Thursday. It marked the first time outflows were seen for 27 weeks, said the company.
These stock mutual funds are traditionally purchased by retail investors, whereas ETFs – which track a benchmark index – are believed to be more frequently used by institutional investors, according to Thomson Reuters, the parent company behind Lipper. Stock exchange-traded funds saw net inflows of $4.8 billion last week.

Whilst this might ring alarm bells for some, with hefty valuations leading many to question the recent bull market in equities, Brenda Kelly, chief market strategist at brokerage IG, believes that the outflows are understandable with the second-quarter earnings season just around the corner.

“In light of the poor GDP (gross domestic product) number in the first-quarter stateside, investors will likely want to know whether or not companies have experienced a rebound in activity in (the second quarter),” she told CNBC via email.
“Revenues have for the most part exceeded expectations over the past four quarters so there’s a good chance some are awaiting confirmation that this can happen again.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza