Jeffrey Yale Rubin and Kevin Pleines at Birinyi Associates, Inc. take issue with a Wall Street Journal piece Friday exploring why many investors refuse to be lured back to the stock market, even as it reaches for new highs.
The Journal report cited statistics from the Investment Company Institute finding that “since the market low in March 2009, investors have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks.”
Rubin and Pleines argue, however that “the article is incorrect.” While not disputing that equity mutual funds have seen net outflows, in 2012 and over the past four years, they contend that money going into exchange traded funds has more than offset those outflows.
“For the first nine months of 2012 investors have taken $70 billion from equity mutual funds but have added $85 billion to equity ETFs: in other words they have increased their exposure to equities.” according to Rubin and Pleines. “And since March 2009 there has been a cumulative net outflow from equity mutual funds of – $221 billion but an inflow of $270 billion to equity ETFs.”
Their conclusion: “We wonder if investors are not necessarily saying that they disliked stocks as much as they are suggesting they disliked active mutual funds.”
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