Investors pull money from US mutual funds, first time in a month

[NEW YORK] Investors pulled money out of US-based mutual funds for the first time in more than a month as their desire for stocks cooled further in the latest week, Investment Company Institute (ICI) data showed on Wednesday.

Overall, mutual funds based in the United States posted US$3.7 billion in net cash withdrawals in the week ended March 30, according to the data. The funds last posted outflows in the week that ended Feb 17.

That dim result came as stock funds - which have boasted strong performance since early February - posted their largest outflows since January.

Mutual fund investors also trimmed risk in their bond portfolios, pushing high-yield funds into outflows for the first time since February as those funds delivered their first week of negative performance since markets bottomed around Feb 11.

Over the week, the average stock mutual fund in the US gained 1.6 per cent while high-yield bond funds moved down 0.4 per cent, according to Lipper, a Thomson Reuters fund research service.

"Investors were less willing to take on risk in the credit market," said Todd Rosenbluth, a director of mutual-fund research at S&P Global Market Intelligence. "Outflows continued for US large caps, consistent with the month of March even as the S&P 500 generated stronger returns."

Stock funds based in the United States posted US$4.9 billion in outflows, twice the number the prior week. Funds focused on US company shares recorded US$3.7 billion in outflows while investors pulled US$1.2 billion from international stock funds, ICI said. Those outflows were about evenly split between developed-market funds and emerging markets.

Bond funds added US$1.2 billion in new cash, including US$675 million that moved into safe-haven taxable-government bond funds, according to ICI, a fund trade group.

While investment-grade funds added US$1.1 billion in new cash, their fifth week of positive flows, high-yield funds returned a net US$473 million to investors, ICI data showed.

The week added to an uninterrupted streak of pain for global bond funds and to the optimism surrounding municipal bonds. Global bond funds added US$1.5 billion in outflows and a 36th week to its streak of outflows that has stripped the funds of US$53 billion in total, according to the data.

Investors added US$1.4 billion to municipal bond funds, ICI said, marking half a year without a single week of net outflows. Overall, those funds added US$26 billion over that period.

REUTERS