Investors burned by two crashes in eight years took longer to get hooked on equities during the current bull market. After pulling $300 billion from mutual funds and ETFs that buy American equities from 2008 through 2012, they’ve since deposited almost $170 billion, according to data compiled by Bloomberg and the Investment Company Institute.
Nasdaq Stocks
At the same time, the Nasdaq 100 Index, tracking some of the largest technology companies such as Microsoft Corp. and Amazon.com Inc., has advanced 255 percent since 2009, recouping about 75 percent of the losses it incurred during the bubble burst.
Pharmaceutical and hospital stocks led gains in the S&P 500 this year, jumping 7 percent, as investors bet new drugs and President Barack Obama’s health-care overhaul will boost profits for companies such as Tenet Healthcare Corp. and Pfizer Inc.
Health-care ETFs drew $4.6 billion, almost half of the $10 billion that sector-focused funds added through March 6, data compiled by Bloomberg show. Real estate and energy funds got $3.1 billion and $2.5 billion, respectively. Technology ETFs absorbed $1.5 billion while those investing in consumer- discretionary companies saw the biggest withdrawals among 12 sectors tracked by Bloomberg, with outflows totaling $2.2 billion.
Equity Valuation
While the S&P 500’s multiple of 17 times reported earnings is close to the average since 1937, it’s about 40 percent below where it was in 2000, data compiled by Bloomberg and S&P show.
The lower valuation reflects faster earnings expansion. Profits for S&P 500 companies have climbed an average 21 percent a quarter since 2009, almost double the growth rate during the dot-com boom, according to data compiled by S&P.
“Valuations are pretty reasonable,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages $414.7 billion, said by phone March 5 from Boston.
“They aren’t cheap any more, but bull markets never end with valuations at the average. It does mean that more of the gains in the market have to come from earnings.”