UPDATE 1-Equity funds lose cash for first time in 15 weeks

Wed Jul 1, 2009 4:48pm EDT
 
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* Investors pull $802 mln in week to June 24

* Domestic equities account for bulk of outflows

* Overall mutual funds saw inflows due to bonds/hybrids (Adds details on data, quote)

By Erin Kutz

BOSTON, July 1 (Reuters) - Investors pulled money out of stock mutual funds last week for the first time in 15 weeks, according to industry data released on Wednesday, reflecting a broad stock market sell-off at the start of last week.

Investors removed $802 million from long-term equity mutual funds in the week to Wednesday, June 24, according to estimates released by the Investment Company Institute, an industry trade group.

The last time investors yanked cash from those funds was on March 11, when they withdrew more than $21 billion.

Domestic equity funds accounted for the vast majority of the equity fund outflows, losing $666 million, with their foreign counterparts losing the remainder.

The outflows reflect a sudden departure from the week before, when equity funds experienced estimated inflows of $3.36 billion.

Mutual funds in total still saw inflows last week of about $3.75 billion, helped by cash that poured into bond and hybrid funds, which can invest in both stock and fixed income securities. Money flowed into mutual funds last week at the slowest pace since the week ending March 11, when all funds categories combined saw outflows of $23.5 billion.

Inflows to hybrid funds decreased by almost $500 million last week to hit $192 million.

U.S. stocks finished mixed last week and suffered their their worst one-day loss in two months on June 22 in a broad-based sell-off, as investors reconsidered the health of the economy. A sharp drop in U.S. crude oil futures and other commodities hit shares of companies sensitive to those prices.

In the week to last Friday, the Dow Jones industrial average .DJI slid 1.19 percent and the Standard & Poor's 500 Index .SPX fell 0.25 percent. The Nasdaq Composite Index .IXIC, however, rose 0.59 percent.

Typically, the market slows in the summer, a trend exaggerated this year by the rebound seen in the past few months, said Tom Roseen, research manager at Lipper Inc, a ThomsonReuters company.

"It had gone up so fast and so rapidly, most people anticipated there would be a pullback," he said.

Investors even scaled back the money they put into bond funds in the week ending June 24. Bond funds as a whole saw inflows of $4.36 billion last week, down from $7.09 billion the week before.  Continued...

 

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