Saturday, September 4, 2010

Mutual Fund Cash Balances at Five Year Low

According to this Decision Point chart, mutual fund cash balances (as a percentage of assets under management) are at the lowest level in their five years of data.

The highest percentage of cash was in March 2009 (the stock market low!), and the previous lowest percentage of cash was in summer 2007 (the stock market high!).

This seems to be a fantastic contrary indicator. And why wouldn't it be? If mutual funds are fully invested, who is the marginal investor?


Unknown said...

Can I answer? The Fed.

And/or the TBRF banks through no-interest ZIRP discount window access.

CP said...

Check out some of my posts on Treasuries. The Fed has no interest in propping up the stock market anymore.

"Treasury Bears Are Wrong - They Need to Look Closer at the Fed's Motives and Opportunities"