“In the worst start to a year for more than a decade, most money managers had retail outflows, and even stalwarts such as American Funds and Vanguard suffered a drop in assets, of 6.6 per cent and 4.3 per cent respectively.” Via (Financial Times).

Translation from business speak into English:

“People are taking money out of mutual funds”

This shouldn’t surprise too many people. The Dow Industrial Average went from over 13,000 to 12,300 during the first three months of 2008. Couple the market turmoil with the new year when people traditional re-evaluate their portfolio, and you have your explanation.

There is a nugget of good information towards the end of this article.

“….long-term assets do not include money market funds, which have seen big inflows”

Translation: “People are simply switching from equity funds to money market funds” (money market funds are simply short term highly liquid and secure parking spots for cash that yield a bit of interest)

Why is this good news?

Because it shows the problem in the 1st quarter was just market confidence. People aren’t dipping into their investments to pay for bills. If we saw a drop in equity assets and money market, that would be an alarm bell.