Investors again retreat from stock mutual funds

WASHINGTON -- Investors withdrew money from stock mutual funds for the 12th consecutive week during the period ended Oct. 10, although cash was pulled out at a much slower pace than during the previous week. Bond funds continued to attract new money at a rapid clip.

The movement of cash was in line with the increasingly conservative approach that investors have taken since the financial crisis of 2008, as money has consistently been withdrawn from stock mutual funds and added to lower-risk bond funds.


Investors withdrew a net $2.3 billion from U.S. stock funds, the Investment Company Institute said in a preliminary report Wednesday.

The total was down from the $10.6 billion that flowed out during the previous weeklong period. The amount pulled out during that week was the largest for a weeklong period in more than a year, dating to the period ended Aug. 10, 2011.

Cash was pulled out during the latest week as the Standard & Poor's 500 stock index fell 1.3 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 16 percent year-to-date.

The ICI said a net $295 million was withdrawn during the latest week from funds investing primarily in foreign stocks.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 12 consecutive weeks.


Investors deposited a net $9.51 billion into bond funds, which have attracted new cash in all but one week so far this year. The latest week's total is down slightly from the $9.52 billion in net deposits during the previous week.

Most of last week's bond fund total was from cash flowing into taxable bond funds, which primarily invest in corporate bonds. Those funds attracted nearly $8.2 billion in new cash. Municipal bond funds took in a net $1.3 billion. Those funds invest in bonds issued by state and local governments.

A net $139 million was added to hybrid funds, which invest in both stocks and bonds.

Overall investors deposited a net $7 billion into long-term mutual funds of all types during the weeklong period, up from net deposits of $564 million in the previous week.