U.S.-stock funds rise 19.3% for the year as investors jump in

Markets are ‘having their cake and they’re eating it too’: Katz

UBS managing director and senior portfolio manager Jason Katz provides insight into market trends. 

Like summer surfers, stocks have continued to zoom past the dangers. And fund investors are willing to ride it out.

The series of records for stock indexes has been fueled by robust buying from individuals. JPMorgan Chase strategists estimate that net inflows to individual U.S. stocks as well as exchange-traded funds rose to a record of almost $16 billion in July before an additional $13 billion poured in during August—"very high by historical standards, ending a record summer," the report notes.

Potential dangers abound for the market, including inflation, the virus and global strife. But for now, corporate earnings have been so encouraging that investors are comfortable with stocks. U.S.-stock funds tracked by Refinitiv Lipper (including mutual funds and ETFs) posted an average return of 2.4% in August, to push their year-to-date gain to 19.3%.

The U.S.-stock funds rose 19.3% for the the year. (AP Photo/Richard Drew)

DOLLAR NEAR ONE-MONTH LOW ON BETS FOR LATER FED TAPER

Many analysts warn that the stock market is due for a pullback after hitting a series of records, in the middle of an economy recovering from the coronavirus and lockdowns. "We are in peak everything—economy, earnings, and [Fed] stimulus," says Gene Goldman, chief investment officer and head of research at Cetera Investment Management in El Segundo, Calif. "Sooner or later the financial markets will need to price in these scenarios as we transition from an early to mid-cycle recovery."

Stocks in this Article

Among Lipper fund categories, gold-oriented funds fell 5.5% in August and are down 9.2% on average for the year despite inflation concerns (which traditionally boost gold).

Small-cap value funds, which focus on stocks with relatively low price/earnings ratios, are the year’s category star, with a 27% year-to-date advance after rising nearly 2% in August.

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International-stock funds continued to trail their U.S. counterparts, on average. They were up 1.9% in August, pushing their year-to-date gain to 11.3%.

Bond funds were down slightly for the month. Funds tied to intermediate-maturity, investment-grade debt (the most common type of fixed-income fund) fell an average of 0.2%, to push their year-to-date change to minus 0.3%.

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