Stocks have added $11.3 trillion in value since the market bottomed in 2009

When we ask prospective clients if they keep track of fundraising trends, few ever mention how often they track investment returns. The stock markets are continuing to set new highs this week. The S&P 500 has risen for four consecutive days, hitting another new peak yesterday.
Investing changed in 2008. The stock market crash at the end of that year wiped away billions of dollars in net worth—forcing many individuals, families and businesses to drastically alter plans. But the steady albeit slow improvement in the economy is showing ever broader optimism in conversations we have with current and prospective donors.

U.S. equity funds posted their biggest quarterly inflows in nine years in the first three months of this year. According to TrimTabs Investment Research, $52 billion dollars flowed into U.S. stock mutual funds and ETFs. To put that into context, investors withdrew a total of $87 billion from U.S. stock funds last year.

Investors are not abandoning bonds for stocks. Bond funds are strong with substantial inflows for the 17th quarter in a row, to a tune of $72.3 billion. Over the last year, bond mutual funds have seen inflows of $278.5 billion versus $44.4 billion into fixed income ETFs. As TrimTabs points out, so much for the “great rotation out of bonds and into stocks. No such rotation has materialized.”
For any major gift conversation or suggestions for approaches to planned giving, an important first step is to understand the current thinking of your donors on investing. Pentamillionares began to voice optimism as early as March 2010, followed by multimillionaires in September 2010. However, it’s taken four years and 100%-plus returns to hear either “my portfolio has recovered from its losses” or, among younger baby boomers, “I have plenty of time to build wealth.” In perhaps 20% of current conversations we are hearing that donors have benefitted from the rally before the financial crisis and/or the current rally” or have always invested conservatively and remain on track to achieve their retirement goals.