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title: Investors Separate from Equities
description: Investors Separate from Equities
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[TRACE Turns 20](https://articles.marketsmedia.com/trace-turns-20)

 07.29.2011

 By Terry Flanagan

 Latest News

# Investors Separate from Equities

 07.29.2011 By Terry Flanagan

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While market participants, such as asset managers may feel the equities market has risen amid negative macroeconomic events worldwide—investor sentiment shows a market correction from 2008, at best.

“There is a little medieval market happening over the past year,” said Thomas Villalta, president and chief investment officer at Jones Villalta Funds, a manager of separate account portfolios for institutions and high net worth individuals.

“I would say there's an equities bull market, there has just been an overshoot for correcting the downside,” Villalta said, who feels that investor sentiment is not robust enough to fuel equities forward.

“If you look at mutual fund flows as a proxy for investor sentiment, you'd see it's not a bull market. There's been almost 20 billion in negative outflows. The money is going somewhere else.”

That “somewhere else” remains bond funds and cash. “Money market funds have come down greatly, but that cash is not flowing into equities,” Villalta told Markets Media. “Bonds are yielding so little, but some yield is better than cash.”

While investors have realized the harsh realities of a low-yield market, their investing patterns have momentum, according to Villalta. “People get into patterns; it's harder to make decisions than to stay the course.” Perhaps investors would rather accept low returns than dive into the realm of the unknown, which today is the up-and-down equity market.

Institutions fear that the equities market is still very volatile, and subsequently harbor negative investor sentiment, according to Villalta. Pundits will comment about equity gains due to investors going after more risk but “we're not seeing that in earnest,” said Villalta. “By and large, investors are still skittish towards equities.”

Ultimately, while the equity markets current face a market correction, such events are cyclical, for Villalta. “There is a fairly low level correction, upward. People have pulled back too much and put money into cash. It will take three to five years to come back fully—until you see solid equity performance. By then, investors have come back at the wrong time and they lose the uptake.”

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