Tags: Vanguard | Individual | Investors | Stocks

Vanguard: Individual Investors Sneak Back Into Stocks

Friday, 13 Aug 2010 08:19 AM

Retail investors are starting to buy stocks again, according to Vanguard Group CEO Bill McNabb.

"I think individual investors have tiptoed back into stocks," McNabb told CNBC. "Our target-date funds, for example, have seen very strong flows.”

“I think it's more of a balanced approach in that regard."

McNabb says investors are also buying short and intermediate-term bond funds as well as target-date funds, which hold a mix of stocks and bonds. He believes investors will continue to show restraint for a while as they gain more confidence.

"We're going through a period of regulation unlike any we've seen in most our lifetimes, you'd have to go back to the 30s for this level of regulatory change,"

McNabb said. "A lot of investors are waiting to see how this all plays out."

Vanguard, which manages $1.4 trillion in mutual fund assets, recently began letting buyers trade its $17 billion in exchange-traded funds free of charge, in order to give investors more opportunity to compare open-ended mutual funds and ETFs.

"The cost equation was complicated by the very low commission charged in the brokerage service," said McNabb.

"So we eliminated that cost so someone can decide if an ETF is the best structure or is a traditional open-end fund a better structure really based on their needs as opposed to cost."

ETFs were jolted more than other securities by the “Flash Crash” in May, Financial Advisor reports, with about 210 of 980 ETFs trading that day at less than half their ultimate closing price.

ETFs represented some 70 percent of cancelled trades, prompting analysts to unfavorably compare them to mutual funds, whose net assets values get tallied up at the end of the day after trading closes.

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Retail investors are starting to buy stocks again, according to Vanguard Group CEO Bill McNabb. I think individual investors have tiptoed back into stocks, McNabb told CNBC. Our target-date funds, for example, have seen very strong flows. I think it's more of a...
Vanguard,Individual,Investors,Stocks
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2010-19-13
Friday, 13 Aug 2010 08:19 AM
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