The Fund-Flows Indicator Is Behaving Strangely

Security prices aren't moving in the same direction as fund flows.

Sep 17, 2020

A Venerable Pattern

Cash flows into (or out of) mutual funds have long been regarded as a meaningful investment signal. Twenty-five years ago, The New York Times marveled at how retail investors seemed to be driving stock prices. “Never before have we had a period where mutual funds have so consistently dominated the demand side of the market,” commented a Wall Street researcher, after July 1995’s equity-fund sales established a new monthly record.

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