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Eventuell Anzeichen einer bevorstehenden Rallye - fehlt nur die Initialzündung (Zinssenkung, Präsi o.ä.)
Funds' cash stash grows Highest level since April '97, Trim Tabs estimates; may signal buying ahead November 28, 2000: 12:22 p.m. ET
NEW YORK (CNNfn) - Mutual fund managers appear to have put more cash in their mattresses lately, not an atypical thing to do in a down market but one that might signal more bullish days ahead.
As of Nov. 22, cash likely accounted for 6.5 percent of U.S. equity funds' assets, the highest level since April 1997, according to estimates from Trim Tabs, which tracks market liquidity.
That's up from 5.1 percent at the end of September and above the 3.8-percent level recorded at the height of the market last March, said Trim Tabs President Charles Biderman. Nevertheless, he pointed out, it is still far below the double-digit cash levels seen in the aftermath of Black Monday in 1987.
And, said Jim Jundt, founder of the Jundt family of funds, the 6.5 percent level is high relative only to the bull market of recent years, when managers were expected to be fully invested in the market, since cash was perceived as a drag on performance.
High cash levels are not necessarily a bearish sign, in fact, some observers see it as a positive. Cash can act as a cushion in a market sell-off by providing a resource for fund managers to scoop up falling stocks. Buying can also signal a market bottom.
Biderman says higher cash may portend well for stocks in the coming weeks or months. "It's sort of like you have a huge herd of restless cattle looking for a gunshot that will send them stampeding into buying," he said.
Sometimes cash levels are increased to prepare for year-end distributions or to guard against too many redemptions in a short period. But thus far, individual investors have shown a lot of resilience, fund industry observers said. Indeed, said Duncan W. Richardson, portfolio manager of Eaton Vance's Tax-Managed Growth Fund, "We haven't found skittishness in our shareholder base."
On the contrary, investors have continued to put money into stock funds despite the rocky market: Equity funds in October received cash inflows of $14 billion, with the majority of that money going to growth-oriented funds, according to estimates from Strategic Insight.
Nevertheless, portfolio managers seem to have kept a good deal of new money on the sidelines. Trim Tabs estimates that since last March there has been a $60 billion increase in funds' cash -- or nearly half the $122 billion that flowed into U.S. equity funds since April.
"The weakest part of the market is the portfolio managers," Biderman said. "(They) stopped buying and started selling."
What it takes for buying to begin
When fund managers do return to the market, they probably won't snatch up just any stock, especially past favorites on the Nasdaq 100 that have burned them. "I think we bottomed Oct. 12 in everything other than the Nasdaq," Biderman said, noting that he expects selling in the technology sector to continue at least until the end of tax-selling season.
Generally speaking, "when concern rises, so do cash levels," Richardson said. But in the same vein, a build-up of sideline cash often signals a rally ahead, Jundt noted.
"When cash levels are high, we know what the next decision will be. We just don't know when," he said. Jundt had significantly increased his funds' cash positions following the April tech wreck, but he said he has brought them down to zero in the past few days.
"We're in a position where some positive news could trigger a rally," Jundt said.
A number of factors might spur buying, said Morningstar senior fund analyst Scott Cooley. Among them: A definitive conclusion to the presidential election, an indication that recent negative corporate earnings revisions were overdone, or a sign that the Fed is less concerned about inflation.
Away from the fray
Economic and political scenarios aside, John Montgomery, founder of Bridgeway Capital Management, said if Trim Tabs' estimates are correct and you are tempted to interpret higher cash levels to mean managers are more bearish going forward, take heart.
"If cash levels are higher, that's good. Portfolio managers tend to get it wrong. They misread the market," Montgomery said, explaining that's why he is happy to rely on computer-driven quantitative models to guide his investment decisions.
And thus far, his funds' cash levels, generally speaking, have not increased, and in some cases are quite low, he said.
Gruß Dampf
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