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Investors pull largest amount from U.S. stock funds since 2014

David Randall

NEW YORK, July 10 (Reuters) - U.S. investors pulled the largest net amount of assets from mutual funds and exchange-traded funds that hold domestic stocks in more than five years last week even as the U.S. equity market hit record highs, according to data released Wednesday by the Investment Company Institute. The roughly $25.1 billion in net outflows from domestic stock funds was the largest since the $25.2 billion pulled from the category during the week that ended Feb. 5, 2014. Over the last two weeks, investors have pulled approximately $30.6 billion from U.S. stock funds. At the same time, the benchmark S&P 500 index has notched several record highs, bolstered in large part by expectations of an equity-friendly interest rate cut by the Federal Reserve by the end of the year. The S&P 500 traded above 3,000 for the first time Wednesday after Federal Reserve chief Jerome Powell said that the central bank would "act as appropriate" to sustain record U.S. growth. "It's surprising to see outflows accelerate because we had a very strong U.S. equities market in the first half of the year and investors have historically put money to work when markets have rallied," said Todd Rosenbluth, director of ETF and mutual fund research at New York-based research firm CFRA. While some of the outflows could be attributed to mid-year rebalancing, "it's a sign that investors are getting more nervous about what's ahead for equity markets in the second half of the year as concerns about a slowing U.S. economy grow," Rosenbluth added. Fixed income funds continued to attract investor dollars. Taxable and municipal debt funds brought in $10.4 billion in new assets last week, continuing a streak of positive inflows into the category over every full week of the year to date. World stocks, meanwhile, lost $3.6 billion in net outflows, continuing a six week streak in which the category has lost $11.6 billion in assets.

The following is a broad breakdown of the flows for the week, including mutual funds and exchange-traded funds:

7/2/2019 6/26/2019 6/19/20 6/12/201 6/5/2019

19 9Equity -28,759 -8,830 10,121 5,039 -9,636Domestic -25,153 -5,417 11,676 6,195 -8,210World -3,606 -3,413 -1,555 -1,156 -1,427Hybrid -560 -1,947 -156 -1,282 -1,017Bond 10,440 10,528 7,932 11,934 4,614Taxable 8,814 8,011 6,342 10,653 3,154Municipa 1,626 2,517 1,590 1,281 1,460

l

Commodity 143 1,703 389 317 681Total -18,735 1,454 18,285 16,008 -5,359

(Reporting by David Randall Editing by Susan Thomas)