Investors continued to pull cash out of global equity funds in the latest week, bringing outflows over the last five weeks to the highest level in almost five years, a report from Bank of America Merrill Lynch said on Friday.
The exodus from European equity funds was even more dramatic as investors chalked up the 14th week of redemptions in a row, the longest run of outflows since February 2008.
Financial markets have been volatile this year as growth in both developed and emerging economies has remained uneven, and doubts have grown about the ability of policymakers to underpin activity.
The ‘risk off’ sentiment hitting stocks was mirrored by strong demand for bonds, cash and precious metals, all of which saw chunky inflows in the week ending May 11, the BAML data showed.
Global equity funds posted a net outflow of $7.4 billion, bringing the total outflow over the past five weeks to $44 billion. That’s the largest outflow since August 2011, BAML said.
A net $3.9 billion left European equity funds, while emerging market equity funds posted an outflow of $2.3 billion, the largest in four months.
Fixed income funds drew in a net $3.5 billion, marking the 10th inflow out of the past 11 weeks.
Notably, however, investors opted for higher-yielding safe havens, pouring $3.2 billion into investment grade bonds but pulling $1.5 billion out of high yield ‘junk’ bond funds and $900 million out of low-yielding government bonds.
Money market funds attracted a net $10.9 billion, the largest inflow in 13 weeks, while precious metals drew in $1 billion, the 17th inflow out of the past 18 weeks, BAML said.
So far this year stocks have returned a mere 1 percent, well short of bonds (7 percent) and commodities (11 percent). The U.S. dollar has lost 5 percent year-to-date, BAML said.