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19% Have Drawn on Their Retirement Savings


Nearly one in five Americans, 19%, have drawn on their retirement savings in the past year to cover emergencies, a survey of 1,004 adults by Princeton Survey Research Associates International for Bankrate in early April found.

Seven percent say they do not have any retirement savings.

In addition, 33% said their financial situation is worse than it was a year ago, while feelings of financial security, as measured by the Financial Security Index, sank to a new low of 93.5, down from 97.0 in March. The previous low was 94.6 in December.

The percentage of Americans who are comfortable with their debt has fallen for the fourth month in a row (January: 27%, February: 26%, March: 24% and April: 18%).

"Raiding the retirement account prematurely depletes the nest egg, subjects the individual to taxes and penalties and deals a permanent setback to retirement security because you can never go back and make up for those early withdrawals," said Greg McBride, senior financial analyst with Bankrate.

 

Hedge Fund Assets Top $2 Trillion in 1Q

The popularity of hedge funds, particularly among institutional investors, propelled total assets under management to a record $2 trillion in the first quarter, according the latest report from Hedge Fund Research Inc.

Not only did total assets under management eclipse the previous record of $1.93 trillion set back in the second quarter of 2008, but steady inflows and the stock market's strong recent performance has pushed hedge fund assets up more than 50% from the nadir of the U.S. economic crisis in the first quarter of 2009.

"The growth of the industry to surpass significant threshold levels of both investor capital and fund performance validates that the hedge fund industry has completed its recovery from the financial crisis," said Kenneth Heinz, president of Hedge Fund Research. "The strategic and structural qualities of investor accessibility and transparency, which have defined the evolution of the industry in past two years, will serve as the primary catalysts for growth to surpass future milestones."

 

U.S. Equity Funds Take In $11.3 Billion in 1Q11

Investors began to return to U.S. equity and global sector equity funds in the first quarter, with U.S. diversified equity funds seeing $11.3 billion in inflows and global sector funds experiencing $14.8 billion in inflows, Standard & Poor's said, citing Lipper data. But not all sectors had strong growth. Concerns over rising oil prices and inflation boosted inflows to commodity funds to $6.2 billion and to natural resource funds to $3.7 billion.

Each of the three small-cap peer groups had inflows totaling more than $1 billion, with small-cap core ($3.6 billion) and small-cap growth ($1.6 billion) garnering the greatest investor attention. In contrast, investors redeemed $8.8 billion from large-cap core funds and $1.1 billion from large-cap value funds.

As the global recovery continues, investors appear to be favoring "risk on" sectors like small-caps, which have greater earning leverage to an economic expansion than large-caps, said Alex Young, a strategist with S&P. But as the recovery matures, large-cap funds will be poised to outperform small-caps, he said.

 

 

Quote of the Week

"Consumer sentiment is resting on the knife’s edge. Sentiment is likely to continue to move based on labor market conditions, fuel costs and equity prices."

- Joseph Brusuelas

Senior Economist

Bloomberg