Monthly Archives: July 2013

When the Federal Reserve (the “Fed”) announced in June that the U.S. economic recovery was showing such progress, based on their assessments at that time, that they may consider starting to taper their bond buying program (i.e. quantitative easing) sooner than originally expected, perhaps as early as the Fall of 2013, investors fled the markets; bonds and equities, in droves. Order was eventually restored to the markets as investors came to their senses, realizing after some additional time to digest the entirety of the comments from the Fed, that the Fed did not suggest that they were going to start raising interest rates, or even sell bonds, in 2013, the damage was already done. Mutual fund and Exchange-traded fund (ETF) flows for the month of June provide evidence of this exiting behavior on the part of investors as well as what we believe to be a re-positioning of portfolios by investors (presumably with diversified growth objectives) to brace for an environment of rising interest rates - where economic, and stock market, growth would be expected to continue to progress to some degree.Read more