Individual investors are flocking to bonds amid concern about economic weakness and fear of a drop in stocks.
Bond mutual funds have drawn more money than stock funds for 30 straight months through June, according to the Investment Company Institute, Bloomberg reports.
And initial numbers show the trend continued in July, which would create the longest streak since 1984-1987.
“Many investors are turning their backs on equities now — after one of the worst decades the stock market has ever seen,” Franklin Resources, manager of Franklin and Templeton funds, wrote in a commentary on its website.
Stocks lost an average of 0.5 percent a year in the 2000s.
The 58 percent plunge stocks suffered from their record high in October 2007 to their low in March 2009 particularly scared many investors.
“Retail investors are still shocked by what has happened in the past two years,” James Kennedy, CEO of fund manager T. Rowe Price, told Bloomberg.
Investors put $559 billion in bonds funds during the past 30 months, while they took out $234 billion from stock funds.
But some experts say the rush to bonds is overdone.
“There’s a lot of relative value in the stock market versus bonds,” Jason Trennert, chief investment strategist at Strategas Research Partners, told WSJ.com Video.
What’s so great about stocks? “You can buy world beating companies at 10 or 11 times earnings,” he said.
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