Below is the mutual fund asset flows dating back to 2007 as complied by the Investment Company Institute. Basically, retail investors have been selling equity funds since then. It would be interesting to superimpose the S&P 500’s returns over this period. But how to get nervous clients back into equities? How do you talk them back in the market after this latest crisis? Do you jump in and out of the market?
That said, we reported recently, “But studies by Morningstar and the Investment Company Institute (ICI) suggest that fund shareholders may not be so dumb after all. According to the latest data, investors gravitate to low-cost funds with strong track records. ‘People make reasonably intelligent choices when they pick active funds,’ says John Rekenthaler, Morningstar’s vice president of research.”