Investors shifted record amounts out of US stock funds and into bonds, while withdrawing money from emerging-market equities for a 15th straight week, according to Citigroup Inc.
US equity funds had US$24 billion of outflows in the week to Wednesday last week, according to a report today from the research unit of the third-largest US bank. Withdrawals from stock funds worldwide totaled US$28.3 billion, the report said, citing data from EPFR Global, a fund research company in Cambridge, Massachusetts. Money managers plowed US$13 billion into US bond funds, accounting for most of the US$14.8 billion that flowed into debt worldwide. All the figures for the period are record highs.
Bonds beat stocks last month for the first time since August as a slowdown in US jobs growth and turmoil in emerging markets from China to Argentina drove demand for the safest securities. The US Federal Reserve’s decision to taper its bond purchases in last month and again this month did more to temper the appeal of high-risk assets than reduce demand for US debt.
“Recent figures spooked people into thinking global growth is not as good as expected, so they sold off on equities and went into safe havens,” said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about US$207 billion. Roth sold stocks late last month and is holding the money in cash, she said.
Investors pulled US$6.4 billion out of emerging-market equity funds in the period, according to the report by Markus Rosgen and Yue Hin Pong in Hong Kong. It was the biggest outflow since August 2010, the report said.
Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co, said last week that the pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets.
The Bank of America Merrill Lynch Global Broad Market Index returned 1.6 percent last month, including reinvested interest, while the MSCI All-Country World Index of stocks lost 4 percent.
A Bloomberg customized gauge tracking 20 developing-nation currencies fell 3.1 percent last month and has rebounded 0.8 percent this month.
Fed policy makers cut their purchases of US Treasury and mortgage debt in two steps to US$65 billion a month from US$85 billion, citing improvement in the outlook for the labor market.