This is a chart that Barron's puts out weekly in their magazine in their Mutual Fund's prices section. The information is provided by Lipper. I've only been able to find it in the paper copy of Barron's and not online. A larger PDF image of the chart is attached below.
Every week I like to review this chart as one of my metrics about the market's condition. Keep in mind that each week's data point represents an AVERAGE of the last FOUR weeks of data.
In the last two weeks, the flows into EQUITY funds has gone from significant net outflows to significant net inflows. Outflows have been occurring pretty steadily since September. Is this buying on the dip?
Both Municipal Bond Fund and Taxable Bond Funds' trends show increasing net outflows, except for the latest week. This makes sense since increasing interest rates will decrease the value of bonds. Investors are trying to pull their funds to avoid capital losses.
Money Market Funds are increasing at a significant rate.
In summary, it tells me that bond investors are trying to avoid losses by getting out of bond funds and generally moving it to money market funds. Some investors are pouring money into equity funds, trying to buy when the market is down.
While I believe buying on the dip is a smart long-term move, not all stocks are created equal. Strategic purchases of individual stocks is the better route. Buying "baskets" (mutual funds) of stocks doesn't appear to be the best route. Why? Many stocks have been overvalued for some time and are dropping back from significant overvaluation. But some stocks are still good from a fundamental perspective and are being pulled down by the general market – creating opportunities.
Be safe, be smart, be prepared, be well read and be successful!
