I'm not a subscriber. I've only accessed the front page.
Interesting article in WSJ on smart money exiting the S&P 500 index
funds. A snippet to follow:
As big stocks soar ever higher, more money is drawn to mutual funds that
mimic the performance of the Standard & Poor's 500-stock index. That
money spurs the index's stocks higher, drawing in even more cash.
Or so the theory goes.
But according to Vanguard Group, the fund
company that runs the Vanguard 500 Index
Fund, the best-known S&P 500 index fund, money is really going out of
such investments, not in. Vanguard contends that while assets invested in
S&P 500 index funds in general have indeed risen, the increase is due
entirely to increases in the value of the stocks in the funds themselves, and
not the result of an increase in investors' cash contributions.
Vanguard, Malvern, Pa., says that investors have withdrawn more of those
assets than they put in over the past three years. It notes that investors
withdrew $67 billion of S&P-500-indexed assets in the first six months of
1998, compared with a $33 billion net outflow in 1997. The company
didn't have more recent data. As of June 30 last year, total assets indexed
to the S&P 500 were $706 billion, while the Vanguard 500 Index Fund
had assets of $64.3 billion at that date. At the end of last month, the
Vanguard 500 had more than $78 billion in assets.
What's going on?
While individuals may be pouring cash into so-called retail, or
small-investor-oriented, S&P 500 index funds, such as Vanguard's, a bevy
of institutional investors, including pension funds, separate accounts and
collective trusts, are taking money out faster. Together those large
institutional investors own about 85% of all assets indexed to the S&P
500, Vanguard says.
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