Investors staged a near-record exodus from US stocks in February

Key Points
  • Funds that focus on U.S. stocks saw investors withdraw $41.1 billion in February, according to market data firm TrimTabs.
  • The total was the third-largest ever and came during a month when the Dow industrials lost about 4 percent.
Pacing yourself in volatile markets
Pacing yourself in volatile markets

February's brutally volatile market saw investors flee U.S. stocks in near-record numbers, and they're only slowly coming back.

Funds that focus on domestic equities saw investors withdraw $41.1 billion during the month, according to data from TrimTabs, which said it was the third most in the market data firm's records. Global funds went in the other direction, attracting $17.9 billion even though stock markets abroad fared even worse than in the U.S.

Outflows were evenly distributed between exchange-traded funds (-$19.6 billion) and mutual funds (-$21.5 billion), TrimTabs reported. As a percent of total assets, the withdrawals represented 0.9 percent of total ETFs dedicated to domestic stocks and 0.3 percent of total domestic mutual funds.

The flight came during a month when major averages swooned into correction territory — a 10 percent loss — amid fears that inflation was about to spike and lead to rapid policy tightening from the Fed, and as traders using ETFs to bet against volatility suffered major losses. The Dow industrials fell 4 percent during the month, which followed a January that featured the fastest start ever for the market.

The outflows were concentrated in the earlier part of the month, as activity picked up in the final week, with U.S. equity ETFs taking in $6 billion.

Stock market losses probably would have been worse had corporations not stepped in to snap up their own shares. Buybacks amounted to $151.1 billion for the month, a record, pushing the quarterly total to $212.5 billion, well on the way to another record, according to TrimTabs.

Even with the downdraft in stocks, the two biggest ETF draws for investor money focused on domestic equities. The iShares Core S&P 500 and the Vanguard S&P 500 funds took in a combined $4.7 billion over the past month, according to FactSet. However, that total was more than offset by the massive $21.3 billion that left the SPDR S&P 500, the most popular ETF.

Overall, investors have pulled $59.7 billion from U.S. equity mutual funds but have added $11.2 billion to ETFs.

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