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Despite the big run in domestic equity prices for 2007, investors are still conservative.In a note sent to clients yesterday, Tom McManus, chief investment strategist of Bank of America, points out that investment in open-end mutual funds increased a measly +$1.2B, slightly better than the +$1.0B figure for the prior week. Total growth in equity fund assets was just 1.9% year over year. This is hardly a sign of stock market euphoria.
While in taxable bond funds, growth was 9.9%, with total corporate bond investment jumping 12.2% and investment grade bond investment jumping 18.1%.
As the baby boomers get older, it should be expected that investors will allocate more of their assets into more conservative instruments. However, this is very conservative and a sign this bull market has a long way to go.
Stay with stocks and avoid bonds is still the investment theme until there is a serious sentiment change in favor of stocks.
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