Question:
What is mutual fund flow?
Mutual Fund Flows
A sentiment indicator that we monitor each day is provided by the Nova and Ursa funds from the Rydex Series Trust. The Nova fund is designed to have a target beta of 1.5. In other words, using shares of equities, stock index futures contracts, and options on those securities and futures, the fund has a target performance benchmark equal to 150 percent of the S&P 500 Index (SPX). Traders who invest in this fund are considered bullish on stocks. The Ursa fund is designed to provide a performance inverse to that of the SPX by using a combination of short selling and options on stock index futures. Investors in this fund are considered bearish on stocks.
We can get an accurate view of the sentiment picture by comparing the amount of assets in each fund. Specifically, we divide the total assets in the Nova fund by the total assets in the Ursa fund to arrive at a Nova/Ursa ratio. A high Nova/Ursa ratio indicates an extreme amount of optimism (everyone investing in Nova) and a low Nova/Ursa ratio indicates an extreme amount of pessimism (everyone flocking to Ursa).
In response to the huge rise in popularity of the technology sector in late 1998 and 1999, Schaeffer's Investment Research added the Rydex OTC/Arktos ratio to its arsenal of sentiment indicators. The OTC is a bullish fund that follows the Nasdaq 100 Index (NDX). In contrast, the Arktos fund is allocated so that it provides a return opposite that of the NDX. Similar to the Nova/Ursa ratio, a high reading on the OTC/Arktos ratio means that investors are optimistic toward the market and a low reading shows that investors are pessimistic toward the market's future.
Investing Frequently Asked Questions
What is a relative strength index?
What is a relative strength indicator?
What is support and resistance?
What is regression channel analysis?
What are the basic option trading strategies?
How do cover stories effect stocks?
What are Exchange Traded Funds (ETFs)?
Why is losing part of the game of trading options?
How do I determine how much capital to allocate per trade?
Why is consistency the key to success with options?
What´s most important when choosing an options broker?
What is a full service broker?
what is a deep-discount broker?
What is an options-specialized broker?
What should I expect from a discount broker?
What should I look for in an online broker?
How can I avoid scam financial analysts?
How can I do a background check on a broker?
Are financial analysts reliable?
Is it ok to invest with a broker who cold calls me with a great investment idea?
How should I handle problems with my broker?
What is a full-service broker?
Why is my broker asking me so many questions?
Do I have to use the 529 plan offered by my state?
Should I start investing in a 529 fund for my child in high school?
What is dollar cost averaging?
Does having a 529 fund decrease eligibility for financial aid?
When should I not contribute to a 529 fund?
Should I tell my family when I open a 529 account?
Does my child get control of the 529 money after age 18?
How are mutual funds regulated?
Do I have to register my investment club with the SEC?
How can I get brokers to stop calling me?
How can I make the most on my stock investments?
Are there exceptions to the "buy and hold" rule?
How can I try out investing without losing money?
What is a less risky way to invest in the stock market?
How can I tell if a stock's statistics are average?
What is the simplest way to invest in bonds?
How do falling interest rates affect bonds?
What does a bond's rating mean?
Should I buy bonds from my synagogue or church?
How can I remember to invest each month?
Do I need to know a company's ticker symbol to get an online stock quote?
What is a disadvantage to investing online?
How can I manage my online investments easily?
How can I tell if my stocks are doing well?
Why should I ask for an online annual report instead of getting one by mail?
Are online stock quotes accurate?
What does it mean to have a diverse portfolio?
How can I diversify my portfolio even if I don't have much to invest?
How can I invest in a specific market segment without exposing myself to to much risk?
What is market capitalization?
How can I minimize risk in my portfolio?
What is the best way to invest in foreign companies?
Is there such a thing as too much diversification?
How can I quickly compare mutual funds?
Why should I talk to my friends and family about money?
How much money should I have saved for an emergency?
What are the benefits of money market accounts?
How do I ladder my CD investments?
Why not keep my savings in a savings account?
How can I find the best interest rate for my liquid investments?
How can I find a credit union to join?
How can I build up an emergency account?
What is an appropriate asset allocation for me?
What are good investments for my short-term goals?
What money should I invest in the stock market?
Should I contribute to my company's 401(k) plan?
How can I continue to invest for retirement after I've maxed out my 401(k)?
What mutual fund should I buy?
How can I make sure I'm investing in companies that share my values?
Should I pay extra fees for an actively managed mutual fund?
Are loaded funds better than no-load funds?
What should I do before investing in mutual funds?
Should I be paying a 12b-1 fee for my mutual fund?
Why should I rollover my retirement accounts into an IRA?
Is it too late to contribute to last year's IRA?
Should I choose a Roth IRA or a traditional IRA?
How much can I contribute to my IRA?
Am I eligible to contribute to a Roth IRA?
Can I contribute to an IRA if I already have a 401(k)?
Where should I invest my IRA money?
Is there an IRA for self-employed people?
What should I do with my 401(k) money when I leave my job?
| Guru Spotlight |
| Sherril Steele-Carlin |
