Capital Markets: Observations and Insights Autumn 2019
Chasing Yield and Pursuing Safety Lending vs. Owning
LENDING vs. OWNING
• Despite very low interest rates, investors have been allocating away from equities and into bonds as well as cash
Investors Have Plowed Money into Bonds
…And into Cash
1,600
Stocks
Bonds
1,400
1,000
1,200
800
1,000
600
800
400
600
200
($ billions)
($ billions)
400
0
200
Cumulative Fund Flow
-200
Retail Money Market Funds
0
Jun-17
Jun-18
Jun-19
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Mar-17
Mar-18
Mar-19
Dec-16
Dec-17
Dec-18
Sep-16
Sep-17
Sep-18
Sep-19
Source: Morningstar, Investment Company Institute, Alger. Bond flows include taxable and municipals and stock flows include U.S. equity, international equity and sector funds —all include passive and ETF flows.
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