De-Risking or Re-Risking
Since the end of 2008, a point in time when the financial crisis was near its worst, investors took out more than $105 billion in stock ETFs and mutual funds than they put in. During 2011, withdrew a net $34 billion in large cap stock funds. Yet, since the end of 2008, investors have added more than $55 billion to sector funds (including $12 billion in real estate funds). The question is, “Has derisking turned into rerisking?”
Between 2006 and 2011, college and university endowments cut their holdings in U.S. stocks from 25% down to 16% (source: Nacubo-Commonfund Study of Endowments). These same institutions have also increased their holdings in alternative investments (e.g., hedge funds, private equity, and real estate) from 40% to 53% of their holdings.