Dec 6, 2019

Traders keep selling stocks and stuffing cash into savings accounts

Dion Rabouin
Expand chart
Data: Investment Company Institute; Chart: Andrew Witherspoon/Axios

The return of bullish sentiment that has driven the stock market to fresh all-time highs hasn't dented the safe-haven appeal of money market funds, which are akin to savings accounts or holding cash.

Why it matters: In fact, data shows investors are still selling equities on an overall basis and moving that money into money market funds.

By the numbers: For the week that ended Dec. 4, $2.37 billion of inflows had gone into MMFs, taking total holdings to nearly $3.6 trillion, data from the Investment Company Institute shows.

  • Money market funds have seen the third-highest annual inflows this year since ICI began keeping track in 1984.
  • This year's inflows trail only 2007 and 2008 when the world was in the throes of the financial crisis.

The intrigue: The flows are happening despite a nearly 25% gain this year for the S&P 500. And even during the market's latest breakout and bull run since September, global and U.S. equity funds have had consistent outflows.

  • Flows into money market funds last week were higher than any weekly fund flows into U.S. equity mutual funds and ETFs since the week ending Oct. 16.
  • U.S. and global equities have seen net outflows in eight of the last 10 weeks, according to ICI's data.

Go deeper: A "wake-up call" to corporate executives

Go deeper

Dion Rabouin

A record amount of money has been pulled out of stocks in 2019

Data: ICI; Chart: Axios Visuals

Traders still don't trust the stock market's run and are moving money out of equities at a historic level, despite a 25% year-to-date gain for the S&P 500.

What's happening: Data from the Investment Company Institute shows money has been pulled out of equity mutual funds and ETFs in every month this year except January.

Go deeperArrowDec 9, 2019
Dion Rabouin

A possible explanation for 2019's equity outflows

Data: Investment Company Institute; Note: Nov. 2019 and Dec. 2019 data are estimates; Chart: Axios Visuals

The historic outflow from equity funds this year likely has a lot to do with the aging demographics of the U.S., analysts at the Investment Company Institute say.

What it means: Shelly Antoniewicz, ICI's senior director of industry and financial analysis, says that the record flows out of U.S. and global equity funds and into bond and money market funds largely reflect older Americans' desire for safety.

Go deeperArrowDec 12, 2019
Dion Rabouin

The end of the magic stock market

Illustration: Aïda Amer/Axios

The stock market's magnificent bounce in 2019 has been hard to explain and fueled largely by factors like stock buybacks and central bank easing.

The big picture: But to see an increase in their share prices next year, U.S. companies will have to actually increase their earnings, experts say, a factor that's been notably absent from this year's rally.

Go deeperArrowDec 11, 2019