This quarter is one for the Wall Street history books — stocks are on track to post their best quarter since 2009 and best start to a year in more than two decades. However, investors shrugged it off.
Nicholas Colas, co-founder of DataTrek Research, said investors shouldn’t buy the comeback, calling this year’s rally “a January effect on steroids.”
While shunning equity funds, investors are warming to the corporate bond market. The amount of investor money flowing into high-grade bond funds is now on pace break a new monthly record. The move is seen as a hedge to the Federal Reserve’s about face on interest rates last week, saying it would pause rate hikes. Corporate bond yields are generally higher than U.S. Treasuries.
Investors have also been piling up cash as volatility increases and global uncertainties mount. According to a recent Charles Schwab survey, 44 percent of the active traders on its platform have increased the cash portion of their portfolios in the past three months.