Retail ETF Investors Are Beginning To Show Signs Of Jumping Into The Market
”Retail investors don’t seem to agree with Gordon Gekko just yet that greed is good but, for the first time in a long time, they do seem more enthusiastic about US stocks. During this headline-making stock market surge, individual investors have sidestepped the stock market, preferring instead to run headlong into fixed-income products. Now there’s evidence to suggest that, once again, they might be feeling some love for stocks in their own backyard,” Josh Lipton Reports From Minyanville.
Lipton goes on to report, “In the first quarter, according to data we mulled over this morning from Lipper FMI, investors did keep on committing a lot of capital to bond funds: $92.6 billion in the first quarter, to be exact. But, interestingly, your friends and neighbors also put some of their hard-earned money to work in US stock funds. Domestic equity funds, excluding exchange-traded funds, had inflows of $13.5 billion. That’s in comparison to outflow of $24.2 billion in the year-ago period, according to Lipper number crunchers. Investors are inching back into US stocks for a couple broad reasons, say strategists.”
“First and foremost, there’s nothing like a virtually uninterrupted surge to the right-hand corner of the stock chart to generate some interest from retail investors: the S&P 500 has rocketed up 76.5% since the March 9, 2009 closing low of 676.53 through Friday’s close of 1194.37. As we write here in the midday on Monday, the SPDR S&P 500 ETF (NYSE: SPY), which includes holdings such as Exxon (NYSE: XOM), Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), General Electric (NYSE: GE), and Bank of America (NYSE: BAC), is up 0.4%,” Lipton Reports.
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“There is nothing like an 80% rally to get retail investors to buy,” says Miller Tabak’s Peter Boockvar. “Unfortunately, it is after the 80% rally. That has been typical of the past: Retail investors are a lagging indicator.” But Boockvar doesn’t foresee the latest stats from Lipper as indicating some sort of significant turning point, however. Investors, he thinks, will not stampede back into the stock market in big numbers. “The retail money that will come in will pale in comparison to what we have seen in prior cycles,” Boockvar tells us. “They have put a lot of money into fixed income, and while that will be hurt by rising interest rates, it isn’t rushing into equities any time soon.” The strategist adds, “A second bear market within 10 years has probably wiped out a generation of interest in the stock market.”
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We have put together some details on the SPDR S&P 500 ETF (SPY) below:
The SPDR® S&P 500® ETF (NYSE: SPY) is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index (Ticker: SPTR). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
| As of04/12/2010 | |||
| Name | Weight | Shares Held | |
| Exxon Mobil Corp (XOM) | 3.00% | 32,011,544 | |
| Microsoft Corp (MSFT) | 2.14% | 51,735,620 | |
| Apple Inc (AAPL) | 2.03% | 6,148,338 | |
| General Electric Co (GE) | 1.85% | 72,344,300 | |
| Bank Of America Corporation (BAC) | 1.73% | 68,019,740 | |
| Jpmorgan Chase & Co (JPM) | 1.70% | 26,938,120 | |
| Procter & Gamble Co (PG) | 1.68% | 19,693,904 | |
| Johnson & Johnson (JNJ) | 1.66% | 18,658,858 | |
| Wells Fargo & Co New (WFC) | 1.55% | 35,126,720 | |
| International Business Mach (IBM) | 1.54% | 8,807,602 | |
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