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davepamn

M¢25 Funded By Mahalo ? | July 06, 2009 03:06 PM

Are mutual funds chasing performance and expecting short term profits? Does the economy look bad long term?

Rationale for the performance chase:

1. Mutual fund managers are buying corporate bonds, yields are high because of increased fear corporates will default. The mutual funds want the earnings to report to their shareholders.
2. Mutual fund managers have spent $4.9 billion for emerging market companies. MSCI emerging market index is up 34%. Brazil, China, India, and Russia claim internal strength growth.
3. There has been a $7.8 billion investment in natural resources and precious metals suggesting manufacturing orders or anticipation of increased order is occurring. Mutual funds are chasing commodities and junk bonds.
4. In the mid 1990s, Mexico was totally dependant on the flow of money from American mutual funds and pension funds. Mexico offered to exchange peso-denominated bonds from the tesobono, a short-term note indexed to the dollar - a promise to protect investors against devalutation, a promise to maintain, as the Peso declined against the dollar

Do you think Mutual funds will chase performance short term and increasing risk because of greed?

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finfribble

August 07, 2009 03:05 PM

I think they are just staying fully invested because they've lost so much they don't to miss the rally. I know they say there's a lot of money on the sidelines but that's not mutual fund money that's tactical money.

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Voted as best: davepamn, williamwaco

davepamn

August 07, 2009 05:25 PM

Do you have evidence as to how fully invested the largest mutual funds are?

$13 trillion dollars withdrew from the market. How much of that money has returned?

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