Jul 12, 2019

Retail investors panicked even as stocks hit all-time highs

Data: Investment Company Institute; Chart: Andrew Witherspoon/Axios

Investors pulled more than $25 billion out of U.S. equity funds in the week ending July 2, right as the stocks were hitting all-time highs, data shows.

The big picture: It was the second highest level of fund redemptions for domestic stocks since the Investment Company Institute began tracking data in January 2013. ICI's data mainly tracks retail investors who have close to $10 trillion invested in domestic mutual funds and ETFs.

Why it matters: Last week's selloff shows that even when the stock market is rising — the S&P is up nearly 19% so far in 2019 — retail investors are moving out of stocks, showing the opposite behavior of what they've demonstrated during market booms of the past.

  • ICI's data shows that the largest outflows on record were seen during the first week of February 2018, when the market tanked.
  • Investors have been selling stocks in aggregate all year, as concerns grow about the longest U.S. recovery on record and an increasingly uncertain geopolitical and market environment.

Yes, but: "While this outflow may seem [sizable] in simple dollar terms, it's important to realize it represents only .01 percent of the $9.6 trillion invested in domestic equity mutual funds and ETFs as of May 2019," Shelly Antoniewicz, ICI's senior director of industry and financial analysis tells Axios by email.

  • "When viewed in this context, it reinforces the long-term investment mindset of fund shareholders."

Go deeper: Investors are selling stocks, but the market keeps rising

Go deeper

Hedge funds see all-time high assets despite ongoing outflows

Data: eVestment; Table: Axios Visuals

Hedge funds continue to struggle this year with divergence among large and small funds growing more stark.

What's happening: Inflows and strong performance by large fund managers pushed the total level of assets under management to an all-time high in the first 6 months of 2019, despite an overall decline in assets. The HFR Global Hedge Fund Industry Report shows hedge funds increased assets to $3.245 trillion, edging past the previous record set in the 3rd quarter of 2018.

Go deeperArrowJul 22, 2019

Retail investors need a reality check

A new survey of 9,100 retail investors in 25 countries from investment bank Natixis finds that many are in need of a "reality check."

Between the lines: The survey showed retail investors feel especially confident in their return expectations, with long-term return expectations rising to 10.9% (above inflation) from 9.8% in 2018. However, a contingent of U.S. financial advisors also surveyed by Natixis in 2018 think an annual return of 6.3% is realistic.

Go deeperArrowJul 16, 2019

Hedge funds have their best first half since 2009

Data: eVestment; Table: Axios Visuals

Hedge funds delivered their first-half best performance in a decade, rising more than 7% overall, according to data from eVestment. The industry also saw gains in June after a downturn in May when investors sold losing funds and bought winners.

Between the lines: Hedge fund divergence continued with long/short, equity, and event-driven funds delivering the best returns so far this year, while FX, commodity and fixed-income funds barely had positive returns.

Go deeperArrowJul 12, 2019