Equity mutual funds leaving are holding the smallest cash reserves since 2007 in a sign that gains for the Standard & Poor’s 500 Index may slow. Cash dropped to 3.6% of assets from 5.7% in January 2009, leaving managers with 172 billion USD in the quickest decrease since 1991. The last time stock managers held such a small proportion was September 2007, a month before the S&P 500 began a 57% drop.
“It’s not a red light, but it’s a flashing yellow light that the strongest part of the rally is probably over,” said Jerome Dodson, who oversees 3.6 billion dollars as president of Parnassus in San Francisco.
The percentage of cash held by funds suggests that you want to be wary of who’s left to do the buying.
Related ETF`s: SPDR SP 500 (ETF) (SPY), ProShares UltraShort SP500 (ETF) (SDS)
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