Week's exit from stock funds biggest since 2011

WASHINGTON -- Investors withdrew cash from stock mutual funds for the 11th consecutive week during the period ended Oct. 3, removing money at the fastest pace in more than a year. Bond funds attracted the largest amount of new money in three years.

The movement of cash during the weeklong period was an extreme example of the increasingly conservative approach investors have taken since the financial crisis of 2008, as money has consistently been withdrawn from stock funds and added to lower-risk bond funds.


Investors withdrew a net $10.6 billion from U.S. stock funds, the Investment Company Institute said in a preliminary report Wednesday. It was the largest flow out of U.S. stock funds for a weeklong period since a net $22 billion was withdrawn for the week ended Aug. 10, 2011. That exit from stock funds came amid market turmoil as Standard & Poor's downgraded the U.S. credit rating following a last-minute congressional deal to raise the nation's debt ceiling.

Cash was pulled out during the latest weeklong period as the S&P 500 stock index rose 1.2 percent.

Withdrawals from U.S. stock funds have exceeded deposits each week since the period ended July 18, and for all but two weeks dating to mid-February. Withdrawals have continued even as stocks have gained 14 percent year-to-date.

The ICI said a net $483 million was withdrawn during the latest week from funds investing primarily in foreign stocks. Those funds have attracted cash most of this year, but withdrawals have exceeded deposits for 11 consecutive weeks.


Investors deposited a net $10.9 billion into bond funds, which have attracted new cash all but one week so far this year. The latest week's total was the largest since investors added a net $11.3 billion to bond funds during the period ended Oct 21, 2009. Previously, this year's biggest weekly intake for bond funds was $10.7 billion in early March.

Most of last week's bond fund total was from net deposits into taxable bond funds, which primarily invest in corporate bonds. Those funds attracted nearly $8.1 billion in new cash. Municipal bond funds took in a net $2.8 billion. Those funds invest in bonds issued by state and local governments.

A net $2.3 billion was added to hybrid funds, which invest in both stocks and bonds.

Overall investors deposited a net $2.1 billion into long-term mutual funds of all types during the weeklong period, up from net deposits of $448 million in the previous week.