US fund investors pull most cash from stocks since February, says report

Worries over rate hikes, excess corporate borrowing, and trade tensions are among the factors stoking fears

US fund investors pull most cash from stocks since February, says report

US fund investors, concerned over economic growth and policies, have yanked the most cash from stocks in any weekly period since last February, reported the Investment Company Institute on Wednesday.

The trade group saw a total of US$37.8 billion in withdrawals from mutual funds and ETFs, reported Reuters. The outflows marked a twelfth week of declines, as well as the most cash pulled since an August 2015 scare over Chinese growth. Focusing on stock funds, the group reported over US$21 billion gushing out of stock funds in the week ended December 26, the most since February 2018.

“[W]hile the withdrawals amount to a sliver of the overall assets in such funds, fast-declining sales of funds reflect deteriorating sentiment as people stockpile cash,” Reuters noted.

The redemptions come as major broad US stock indexes officially recorded 2018 as their worst year since the 2008 financial crisis. The last week of December featured major up-and-down swings in all the indexes, capping off a period of investors attempting to adjust to slowing growth expectations and the Federal Reserve’s efforts to restore interest rates to pre-crisis levels.

Investors have also been concerned over excessive corporate borrowing, US-China trade tensions, and a partial US government shutdown that has persisted through the holidays and is heading toward its second full week.

According to preliminary estimates issued last week by research service Lipper, ETF investors were stock buyers in December; mutual fund investors, on the other hand, sucked out a record US$86 billion.

Funds primarily invested in international stocks saw withdrawals reach US$9.3 billion, the most cash ever pulled based on records going back to 2013. Bond-fund investors also cashed in US$9.2 billion worth of their shares, in spite of strong demand for safe-haven municipals.

Funds invested in gold and other assets, meanwhile, saw inflows of US$707 million, the largest influx since April.


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