The May reversal of tide could be longer termed bad news for mutual fund firms in the opinion of Ticonderoga Securities. The WSJ Fund Track column
turns to Ticonderoga in to explain some of the implications of the outflows from equity mutual funds in May. The outflows came on the heels of two months of inflows in March and April.
The article blames May's events -- from Greece to the Gulf to Korea -- for spooking stock markets and mutual fund investors.
The column cites a Ticonderoga Securities report that calls May the worst four-week period for stocks since late February-early March 2009. One difference from that period, though, is that equity fund outflows did not start until four weeks ago, whereas they had been longrunning by early 2009.
The Ticonderoga report suggests "a shattered retail investor confidence" among shareholders.
"While we are not sure if the large outflows this week represent capitulation, we are pretty confident it represents a major negative for the mutual-fund business in general," according to the Ticonderoga report. "We doubt that investors will come back into mutual funds in short order even if the market recovers."
Sean Hanna, Editor in Chief
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