Souring on International Funds?

Posted by: Ben Steverman on January 23, 2008

Here’s a new trend: Investors seem to be just as worried about their international investments as their U.S. holdings. (This is another observation from the TrimTabs data mentioned below.)
Almost $14 billion has been pulled out of international equity mutual funds so far this month. That has almost tripled from December’s $4.77 billion outflow. Throughout the rest of 2007, investors had been moving money overseas, trying to take advantage of strong growth outside the U.S.
Meanwhile, U.S. equity funds have shown a net outflow for every month since May. So far in January, $29.46 billion has been pulled from U.S. funds. That’s still far more than the international outflow, but it’s only up 22% from December. Not the 187% increase that international fund outflows showed from December to the first 22 days of January.
Are we seeing a significant shift in sentiment, a souring of U.S. investors on overseas exposure? If this holds up, the New Year may mark the end of the months-long trend of individual investors pulling out of the U.S. and moving overseas.
They’re finding other places to put their money. According to TrimTabs, so far in January a net $8.41 billion has flowed into bond funds.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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