Mainstream media have been abuzz with rumors that fund investors have been taking money out of their fixed income mutual funds and plowing it into equity funds recently—dubbed the great rotation. Recent fund flows show this announcement might be a little premature. We have seen a renewed interest by fund investors in equity funds. Year to date through Wednesday, February 27, equity investors have injected a net $69.3 billion into fund coffers (including conventional funds and exchange-traded funds [ETFs]). However, the money appears to be new money entering the market; for the same period taxable bond funds have attracted some $52.5 billion, while only money market funds have experienced net outflows (-$37.7 billion).
Annual Flows ($Bil) Into Equity Funds and Fixed Income Funds
Source: Lipper
We’re not saying it won’t come to fruition, just that it hasn’t happened yet.
