Hot money flowing out of the US

US investors are taking note of the weakening dollar (see Top Dollar no more? for more info on the dollar weakness). Data released by Merrill Lynch shows that so far in 2006, Americans have been net sellers of US mutual funds (fund flows were -3.9% as a percentage of total assets). Interestingly, the slack has been taken up by non-US funds, which have recorded flows of +17%. These figures demonstrate that US citizens are losing confidence in the dollar and are looking to enhance returns by purchasing non-US funds.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Richard Woolnough

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