Investors Pick U.S. Banks Over Bond Funds, TrimTab Says

Investors put $356 billion into U.S. checking and savings accounts in the first six months of this year, almost double the $188 billion they deposited into bond mutual funds and exchanged-traded funds, according to TrimTabs Investment Research.

Equity mutual funds and ETFs attracted $6 billion in net deposits, Sausalito, California-based TrimTabs said in a statement yesterday. Retail money-market funds lost $21.3 billion to withdrawals in the first half, according to the firm.

“People are risk-averse in a risky world and don’t trust the powers that be to manage the economy and the markets,” Charles Biderman, chief executive officer of TrimTabs, said in a telephone interview. “When that happens, you hunker down and put money away for better times.”

Investors are largely avoiding equities even as stock markets have rallied this year. The MSCI ACWI Index (MXWD) of global stocks rose 7.9 percent and the Standard & Poor’s 500 Index increased 12 percent through yesterday. Europe’s sovereign-debt crisis has sent some investors into the perceived safety of bonds.

Savers will return to investing in stocks when workers who have been unemployed long-term get rehired and income and the housing market improve, Biderman said.

Net deposits for mutual funds were based on data from the ICI, and TrimTabs provided the money attracted by ETFs, Biderman said. Net deposits into bank accounts were based on data from the Federal Reserve.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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