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Where Long Term Funds Park Their Money

25 July 2010

The Long Term Funds in US

The Investment Company Institution (ICI) keeps in touch with the Fund Managers (The Funds), their shareholders, directors and investment advisers regularly. They aim to facilitate the effective functioning of Funds under the U.S. legislative and regulatory framework. They keep and release the Funds' investment in local as well as in foreign countries. This article will aim to introduce ICI as well as to analyse the data they have collected for the information of the readers.

The Data Collections

The data collected by ICI can be found here in this PDF file.
The data tabulated out how much the Funds have invested in Foreign and Domestic equities as well as in bonds and other investment vehicles.

Graphical Plot
The following is a graphical plot of the data kept by ICI for Foreign and domestic equities.

(Doubleclick to enlarge)

The chart shows that the US Long Term Fund (LTF) has withdrawn about US$300 bln from the domestic equity market since January 2007. Lately, they withdrew a total of US$ 50 bln in May 2010 and June 2010. They increased their withdrawal and withdrew about US$ 7.0 bln in the first 2 weeks of July 2010. As for the Foreign Equity investment, LTF maintained their funds at around US$ 150 bln to US$ 200 bln during the periods shown.

Divergence Between Equities and Funds

There is a divergence between DOW and the US domestic funds as shown in the following graph. This graph illustrates that the US domestic equity Funds decreases as DOW increases in value during the period between March 2009 and April 2010. The LTF withdrew even more funds from the domestic equity market during period between April 2010 to present date.


(Doubleclick to enlarge)


Where LTF Parks their Money ?

To find out, please click here


Conclusion

LTF are buying bonds instead of equities ever since the last recession that started in 2007/2008. The pattern appears to have the tendency of repeating again.


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