May 24, 2022
According to Goldman Sachs, global equity funds experienced some 1.34 trillion USD in inflows since November 2020, more inflows that in the last 25 years combined. Most of these flows went into passive funds replicating a benchmark. Now the tide starts to turn with outflows in excess of 30 bn USD over the last month. There are 2 points worth noting: 1/ Many of these more recent investors start to lose money on their average entry cost. And 2/ Allocations to the equity market of private households remains very high compared to history in the US. Imagine what would happen to stock markets if these would start panicking and voted with their feet.