(Adds additional flows, comments, market performance)
By Sam Forgione
NEW YORK, July 25 Investors worldwide pulled $5
billion out of stock funds in the week ended July 23 after
geopolitical tensions triggered fears of a pullback in global
stock indexes, data from a Bank of America Merrill Lynch Global
Research report showed on Friday.
The outflows, which were all via exchange-traded funds,
marked the first net withdrawals from stock funds in four weeks,
data from the report, which also cited data from fund-tracker
EPFR Global, showed. U.S.-focused stock funds posted $7.6
billion in outflows, marking their biggest withdrawals in nine
Emerging market stock funds attracted $200 million in new
cash, marking their seventh straight week of inflows, while
Japanese stock funds attracted $600 million, marking their fifth
straight week of inflows. Analysts have said the Federal
Reserve's continued accommodative stance on monetary policy has
boosted confidence in emerging market shares.
The downing of a passenger plane at the Ukraine-Russia
border and Israel's launch of a ground offensive against
militants in Gaza on July 17 triggered the benchmark S&P 500
stock index's biggest one-day percentage decline since
April 10 and the CBOE Volatility index's biggest one-day
jump since April 2013.
"The Malaysian airline crash ... along with the ground
invasion of Gaza, increased geopolitical risk substantially,"
said Bryan Novak, director of trading at Astor Investment
Management in Chicago.
He said it was "no surprise" that the outflows were from
ETFs. ETFs are funds that hold a basket of securities and trade
on an exchange like stocks, and are viewed as a quick way to
obtain exposure to various share indexes. ETFs are thought to
represent the behavior of institutional investors.
While the tensions ramped up fears of a larger pullback in
the S&P 500 from record levels, the index managed a modest 0.3
percent gain for the period, partly on solid U.S. corporate
European stock funds posted outflows of $100 million,
marking their third straight week of outflows. The geopolitical
concerns also hit European stocks during the week.
The aversion to risk also showed in outflows of $4.8 billion
from riskier high-yield bond funds, which marked their biggest
withdrawals since June 2013, according to the report. Bond funds
overall attracted $1.9 billion in new cash, marking their fifth
straight week of net inflows.
The outflows from high-yield bond funds also reflected
concerns about a drop in prices on the debt, Novak of Astor
said. The Barclays U.S. Corporate High Yield index, which has
risen 5 percent this year through Thursday, has fallen 0.4
percent this month.
Funds that mainly hold safe-haven U.S. Treasuries,
meanwhile, attracted $1.8 billion, marking their biggest inflows
in nine weeks. U.S. government bonds rallied over the period,
with the yield on the benchmark 10-year Treasury note falling
about 7 basis points to 2.46 percent on the geopolitical
(Reporting by Sam Forgione; Editing by James Dalgleish and