“This issue of Insight takes a detailed look at net redemptions. We provide historic context, examine what’s driving them, and measure their impact. Are investors really abandoning mutual funds—a devastating prospect for the industry? Or are the net redemptions due more to a buyers’ strike that should logically end once the stock market outlook improves? Our overall view favours the strike scenario over the stampede.
[The attached exhibit] puts the current rash of redemptions into historical context. Starting with 1991, we divided redemptions by average assets outstanding in the January to August period of each year. For example, by August 31 of this year redemptions claimed 9.3% of all average long-term fund assets in 2002, and 8.7% of average assets in equity and balanced funds. Surprisingly, given all the angst in the air, those rates are in the low end of the historic range. Things are not as bad as they might seem; at this point there is no evidence of a rush to the exits.”