Investors slammed US-based stock funds during the latest week, pulling $17.5 billion, the most cash from such investments since June, according to Lipper data on Thursday.
The withdrawals came during a volatile week for markets as minutes from the most recent Federal Reserve policy meeting showed broad agreement on the need to raise borrowing costs further, cementing investor concerns that had helped cause a major sell-off the week before.
Domestic stock mutual funds and exchange-traded funds (ETFs) posted $18.2 billion in withdrawals, only marginally offset by $648 million moving into equity funds focused abroad, according to data from the research service that covers the seven days through Oct. 17.
Rising rates could draw money away from stocks and into bonds. It could also crimp the economic growth that has plumped corporate profits to record levels and enabled a near decade-long rally.
“There were people ducking for cover,” said Tom Roseen, head of research services at Lipper. “This is fast money – people getting in and getting out.”
Also during the week, Japanese stock funds based in the United States but invested primarily in Tokyo pulled in $1.2 billion, the most cash since 2013 and an endorsement of that market’s chances to rally.
Despite a strong start to earnings season and the hope of rising rates increasing bank profits from lending activity, fast-money investors pulled $2.5 billion from financial sector funds, the most on record.
The following is a breakdown of the flows for the week, including mutual funds and ETFs: Sector Flow Chg % Assets Assets Count ($blns) ($blns) All Equity Funds -17.545 -0.24 7,212.618 12,217 Domestic Equities -18.193 -0.35 5,163.920 8,669 Non-Domestic Equities 0.648 0.03 2,048.698 3,548 All Taxable Bond Funds -1.870 -0.07 2,765.150 6,042 All Money Market Funds -14.981 -0.54 2,745.148 1,039 All Municipal Bond Funds -0.642 -0.16 413.294 1,430