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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (8783)	3/23/1999 10:17:00 AM
From: Les H	Read Replies (1) \| Respond to of 99985

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 Vanguard, Malvern, Pa., says that investors have withdrawn more of those assets than they put in over the past three years.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. interactive.wsj.com