19 FEBRUARY 1994, Page 23

Shopping around

UNTIL NOW that idea had been looking less and less attractive. Bank depositors large and small, offered rates of interest that barely kept their money warm, shopped around for something better. They found higher yields in the stock market. So they bought bonds and mutual funds (unit trusts) and found that their buying pushed the price up. How gratifying — but they now had to look further for high yields, to the markets of Europe and then to the mar- kets emerging so volcanically all over the world. Their buying pushed these prices up, too. One figure tells the story. Last year, $128 billion went into mutual funds of which $30 billion went overseas. For these funds, 1991 and 1992 had both been record years, but 1993 beat the two of them put together. It now seems impossible for money to continue flowing into mutual funds (and thus into the world's markets) at this sort of pace. Some of it might even start to flow back again. That is the wind- chill from Mr Greenspan. That is how mar- kets catch cold.