Salient to Investors:
US balanced funds received record inflows of $35.2 billion from January to April, the most in any four months, showing easing individuals’ reluctance to join the record-breaking rally in the S&P 500 Index. Inflows into hybrid funds reached records in February 1994 in the middle of a 417 percent gain for the S&P 500, and in April 2004 amid a 101 percent rally.
Fixed-income funds took in $82.6 billion in the first four months, adding to the more than $1 trillion that came in the previous 4 years. Inflows into US equity funds represent less than 5 percent of the $400 billion that came out in the previous four years.
Michael Holland at Holland & Co. said the inflows show the early stages of the healing process and reduction in the pervasive negative psychology about the stock market – levels of stock ownership remain very, very low despite four years into a bull market.
461 of the 500 S&P 500 companies are above their 200-day moving average and up for the year.
This market is approaching the average 5-year duration of bull markets since World War II. The S&P 500 has gone more than 100 days without a 5 percent retreat, the longest stretch since February 2007. The S&P 500 is at 16.1 times trailing earnings, the highest since 2010.
Hayes Miller at Baring Asset Mgmt said it is getting late in the day at these valuations, and the equity market is not going to give us a big blast like it has.
The median economist predicts the US economy to grow 2 percent in 2013 versus 2.2 percent in 2012.
Paul Zemsky at ING Investment Mgmt said the flows into hybrid funds are bullish for US equities because a lot of this money will actually be long money.
Click here to receive free and immediate email alerts of the latest forecasts.