American Investors Move Away from US Assets

Financial Times ^ | 8/15/2005 | Jennifer Hughes in New York

[ex-Texan]

American investors diversified away from the US at the fastest rate in 10 years, even as foreign buyers stepped up their purchases of US assets, data released on Monday suggested.

US investors bought $146bn of overseas bonds and equities in the past 12 months more than at any time since 1994.

But despite anxieties about the still-growing US current account deficit, overseas investors poured a net $71.2bn into US assets, up from a revised $55.8bn in May, according to the Treasury. * * *

The dollar rose to $1.236 from $1.239 against the euro on the news.

The US needs to attract more than $2bn in net inflows each working day to cover the current account gap, of which the capital and trade accounts are the most visible and biggest components

[ex-Texan]

You need to register on the Financial Times to read the full report. Appears to me that foreigners may have more confidence in the U.S. economy than many of the wealthiest Americans. Perhaps most of this foreign money flowing into the U.S. is coming from Europe? Last week I read a report about Saudi Arabia pulling its cash out of other countries. Read More Economic News? Or, check my FR page or you may search my screen name. Just my personal opinion, people. But nobody listens to me, anyway. I'm just a geezer living in the tiny peoples' republik of Oregon.

[Mister Baredog]

It's called "diversification".

[reformedliberal]

Our money manager put it this way: it is his job to see where gains are going to be in the future. Therefore, some money is invested in funds that represent assets in developing countries that are growing so quickly, the gains are double digit ones over a short time span. The US is a mature economy that doesn't grow that quickly or to that degree.

However, these investments are simply a part of a diversified portfolio. We have a small portfolio that is only 1/2 in equities, due to our age. The rest is in laddered corporate bonds. We are far from the wealthiest Americans and we haven't lost any faith in the US economy.