Investors Switch From Equity Funds to Bonds --- Shift Into Fixed Income Took Place at Record Pace Amid Flight to Safety Sparked by Market Swoon
Investors swapped out of U.S. equity funds and into bonds at the fastest clip on record in the most recent week, according to Lipper Inc., as they grasped for safety while the stock market swooned.</br></br>Traditional U.S. stock mutual funds and exchange-traded funds together saw withdrawals of $18.8 billion in the week ended Wednesday, their biggest weekly withdrawals on record. The reversal, led by ETFs, comes after U.S. stock funds attracted $172 billion in 2013, the biggest inflow since the financial crisis.</br></br>Meanwhile, taxable bond mutual funds and ETFs soaked up $10.7 billion, their biggest intake on record, the data from Lipper, a unit of Thomson Reuters Corp., showed. "There's been jitteriness in the markets," said David Mazza, head of ETF research at State Street Global Advisors. "Broadly, flows are moving away from U.S. equities," he said.</br></br>Investors also continued to yank cash out of emerging-market stocks for the fourth week in a row. Emerging-market stock funds shed $2.7 billion in the most-recent week, the biggest outflow since February 2011, compared with $2.6 billion a week earlier.</br></br>Virtually all of the shift came from money sloshing out of U.S. stock ETFs and into bond ETFs, which often can see big weekly asset swings. Just $386 million flowed out of traditional U.S. stock mutual funds in the most recent week. Traditional bond mutual funds attracted $1.2 billion. Helping drive that shift was one fast-moving ETF money manager, Good Harbor Financial LLC. It cashed in roughly $5 billion in U.S. stock ETFs on Monday and bought roughly that same amount in ETFs made up of Treasury bonds, the firm's chief executive, Paul Ingersoll, confirmed with The Wall Street Journal Monday.