NEW YORK, Aug 4 Investors pulled nearly $66 billion from money market funds in the week ended Aug. 3, the second-largest net outflow on record, data from Lipper showed on Thursday.
"We think the money came out of money market funds last Thursday and Friday because the government had not broken the deficit and debt ceiling stalemate by then," said Tom Roseen, senior analyst at Lipper, a Thomson Reuters company.
"You have to assume investors are taking it and sacking it away somewhere else. People are moving to banks and just looking for a safe place to hide it," he added.
The deal reached on Tuesday to cut the U.S. deficit and raise the statutory debt limit occurred while financial markets were, and remain, in a tailspin. That left neither the time nor readily apparent alternatives for investors to move the cash to new investments.
Equity funds had net outflows of $7.4 billion while taxable bond funds had net outflows of $1.3 billion, the first time both sectors have had net redemptions since the first week of December 2010.
The money coming out of taxable bond funds broke a 32-week streak of net inflows that brought in a cumulative $107.3 billion.
Money market funds suffered their biggest outflow on record during the week ended Sept. 17, 2008, at the height of the financial crisis, when investors pulled $144.4 billion out of the sector.
The weekly Lipper fund flow data is compiled from reports issued by U.S.-domiciled mutual funds and exchange-traded funds.
The following is a broad breakdown of the flows for the week, including exchange-traded funds (in $ billions): Sector Flow Change Total Share
Change in Assets Assets Class
(pct) Count ============================================================= All Equity Funds -7.473 -0.26 2,781.566 10,150 - Domestic Equities -6.033 -0.28 2,043.656 7,673 - Non-Domestic Equities -1.439 -0.19 737.910 2,477 All Taxable Bond Funds -1.294 -0.09 1,407.740 4,273 All Money Market Funds -65.841 -2.76 2,319.588 1,507 All Municipal Bond Funds -0.861 -0.26 331.175 1,582 (Reporting by Daniel Bases; Editing by Dan Grebler)