GOLDMAN: Big-money investors are dumping stocks at the fastest pace in years
Akin Oyedele
BusinessInsider.com
Oct. 3, 2016
Mutual funds could sell more stocks than they buy this year for the first time since 2012, making them net sellers, according to Goldman Sachs.
During the second quarter, the big-money managers who pool assets for all kinds of investors dumped the stock market for a third straight quarter, said David Kostin, Goldman Sachs’ chief US equity strategist.
“Low levels of equity fund cash and significant outflows from mutual funds drive our mutual fund net equity purchases forecast of -$25 billion in 2016,” Kostin wrote in a client note on Friday.
Mutual funds have suffered massive outflows in 2016. As of the end of September, mutual-fund domestic and foreign outflows totaled $156 billion, more than double the amount in 2015 and the most since 2008, according to Goldman.
The year started with warnings from across Wall Street that investors should expect modest returns from the stock market. Those concerns snowballed midyear, when the UK voted to leave the European Union.
Despite weak earnings growth, stocks — measured by the benchmark S&P 500 index — have outpaced many early forecasts and gained nearly 6% this year. But there’s still uncertainty around earnings growth, the presidential election, and the impact of higher interest rates.
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