The low-hanging fruit may be off the tree, but that won’t stop the momentum of the masses. Without confirmation of headwinds that would threaten the economy or markets, investors seem prepared to continue to take on more risk. Jack Pitcher reports in The Wall Street Journal:
Investors are finally putting their money where their mouth is.
U.S.-based mutual and exchange-traded funds have drawn a net $172 billion of inflows so far this year, a marked turnaround after they collectively bled assets in each of the past two years.
The flows mark a break from the risk aversion that investors had shown for much of the past two years and an embrace of the narrative that a strong U.S. economy will support financial markets. Assets in money-market funds and other cash-like products that investors favored last year have plateaued. Investors are putting their money to work in stocks and bonds instead.
“The economy is in good shape, labor markets are in good shape, and central banks globally look ready to provide support,” said Michael Arone, chief investment strategist at State Street Global Advisors. “That’s an attractive backdrop for investing, and it’s the primary reason you’re seeing an increased appetite for everything.”
Flows to U.S. stock and bond funds this year are the strongest since 2021 when interest rates were near zero. Globally, the net $468 billion invested in ETFs through April is the highest on record, according to ETFGI data.
The soft-landing trade appears fully back in vogue after several months of hot inflation data rattled investor confidence. The most recent consumer-price data was lower than forecast, and first-quarter earnings results showed booming corporate profits. The S&P 500 is up 11% in 2024, trading just below its record.
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E.J. Smith - Your Survival Guy
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