(June 1, 2012)
Investors clearly preferred investing in bond to stock funds in April, by a factor of 9 to 1. Could the relative performance of the market during that time motivated the preference for bond funds?
In April, the Dow Jones Industrial Average just managed to stay in the positive territory, gaining 0.016% for the month. However, both the S&P 500 and the NASDAQ Composite slipped in the red, losing 0.75% and 1.46%, respectively. The S&P 500 however, had gained an impressive 3.13% in March.
In April, the Pimco Total Return Fund (the largest bond fund) had a nice gain of 1.46% (net of fees). The previous month the fund gained an negligible 0.01%. (read our special report: Are investors in the PIMCO Total Return Fund missing out?) While March was a better month for stocks, April was a better month for bond returns. In April , the flow of money into bond funds appears to be correlated with superior performance of bonds to stocks and improved performance compared to the previous month.
Investors are expressing strong preferences for longer term bond and taxable bond funds.