Investors dump stocks at fastest rate since Aug 2011: BAML

[LONDON] 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 US$7.4 billion, bringing the total outflow over the past five weeks to US$44 billion. That's the largest outflow since August 2011, BAML said.

A net US$3.9 billion left European equity funds, while emerging market equity funds posted an outflow of US$2.3 billion, the largest in four months.

Fixed income funds drew in a net US$3.5 billion, marking the 10th inflow out of the past 11 weeks.

Notably, however, investors opted for higher-yielding safe havens, pouring US$3.2 billion into investment grade bonds but pulling US$1.5 billion out of high yield 'junk' bond funds and US$900 million out of low-yielding government bonds.

Money market funds attracted a net US$10.9 billion, the largest inflow in 13 weeks, while precious metals drew in US$1 billion, the 17th inflow out of the past 18 weeks, BAML said.

So far this year stocks have returned a mere 1 per cent, well short of bonds (7 per cent) and commodities (11 per cent). The US dollar has lost 5 per cent year-to-date, BAML said.

REUTERS