Smart Money Playing Defense

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Includes: DIA, QQQ, SPY
by: MyPlanIQ

Monitoring where moderate allocation funds are putting their money gives an indication of whether fund managers are being more conservative or aggressive this week.

We track two separate indicators:

  1. Top 3 Moderate Allocation Funds (Smart Money).
  2. Aggregation of all Moderate Allocation Funds.

This is calculated weekly and covers the last one year.

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Trends for the Top 3 Moderate Allocation Funds (Smart Money):

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We have seen the pros reduce their equity exposure from about 76% a week earlier to about 50% for the week ended on November 26th, with sentiment reflecting extreme risk aversion in the resurfacing of the European debt crisis. Compared with last week's more upbeat market sentiment, there is a shift in interest to fixed income as a result of the uncertainties around the containment of the Irish debt crisis and fears of a possible spreading of contagion to the rest of eurozone.

Trends for the Aggregation of all Moderate Allocation Funds:

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Meanwhile, we are seeing an opposite trend for the 481 moderate asset allocation mutual funds we tracked. Despite the market turbulence, they continue to be more aggressive and have increased their equity exposure to about 66% for the week ended on November 26th.

Disclosure: No positions