Capital Markets: Observations and Insights Autumn 2019

Chasing Yield and Pursuing Safety ​ Lending vs. Owning

LENDING vs. OWNING

• Despite very low interest rates, investors have been allocating away from equities and into bonds as well as cash

Investors Have Plowed Money into Bonds

…And into Cash

1,600

Stocks

Bonds

1,400

1,000

1,200

800

1,000

600

800

400

600

200

($ billions)

($ billions)

400

0

200

Cumulative Fund Flow

-200

Retail Money Market Funds

0

Jun-17

Jun-18

Jun-19

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Mar-17

Mar-18

Mar-19

Dec-16

Dec-17

Dec-18

Sep-16

Sep-17

Sep-18

Sep-19

Source: Morningstar, Investment Company Institute, Alger. Bond flows include taxable and municipals and stock flows include U.S. equity, international equity and sector funds —all include passive and ETF flows.

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