Record redemptions for money market funds-EPFR

NEW YORK, Sept 19 (Reuters) - Investors pulled a record amount of cash out of safe-haven money market mutual funds after the net asset value (NAV) of one of the biggest funds fell below $1, according to data by Boston-based EPFR Global.

Money market funds had a record $42.2 billion in net outflows in the week ended Sept. 17, the data showed.

"It isn't surprising because of the breaking of the buck," said Cameron Brandt, global markets analyst at EPFR. "I wouldn't be surprised if a decent amount of that flows back," he said, noting the efforts of U.S. authorities and the central banks globally to shore up the financial system.

On Friday the U.S. Treasury Department announced it will use $50 billion to back those money market funds whose NAV fall below $1 in another step to contain the financial turmoil.

Investors had rushed to the safety of U.S. Treasury bills after the oldest U.S. money market fund, the Reserve Primary Fund, "broke the buck," or fell below $1 net asset value earlier this week because of its losses on debt issued by Lehman Brothers Holdings Inc LEH.N.

Even as the global financial system and the U.S. markets in particular have gone from one violent spasm to the next, investors sought the safety of U.S. mutual funds, making them the only major group to take in cash, a net $6.57 billion.

The best performing sector fund group were the financials, taking in a net $448.6 million, indicating investors are still hoping they have found the bottom for this beaten up area of the market.

The worst performing sector groups globally were technology, showing outflows of $630.8 million; energy had outflows of $498.1 million; and commodities suffered net redemptions of $269.7 million.

"The numbers for these sectors were pretty harsh, which tells you what people think of the economy going forward," said Brandt.

EMERGING MARKETS

Long-only dedicated emerging market stock funds had $2.76 billion in net redemptions last week.

"This is a classic downturn pattern of bailing out of emerging markets and putting cash into the U.S. market no mater what the U.S. is doing," said Brandt.

During the reporting period, the MSCI emerging markets stock index .MSCIEF fell 10.48 percent while the benchmark JP Morgan Emerging Markets Bond Index Plus 11EMJ.JPMEMBIPLUS yield spread widened by 106 basis points. The American benchmark S&P 500 stock index .SPX fell 6.1 percent.

Emerging market bond funds had net redemptions of $468 million with $335.6 million coming out of U.S. dollar-denominated funds and $200 million out of blended funds. Local currency bond funds took in a net $67 million.

U.S. bond funds benefited from the flight to safety, taking in $1.64 billion while high-yield bond funds had net redemptions of $474.3 billion.

Among the major emerging market regions, Latam stock funds had a net outflow of $365.4 million while EMEA (Europe, Middle East, Africa) funds had a net outflow of $343.7 billion.

BRIC regional funds (Brazil, Russia, India, China) had a net $378.72 million in redemptions.

Asia ex-Japan stock fund redemptions were a net $873 million. (Editing by Kenneth Barry)