(Adds quotes from investors, additional stock flow data; bylines)
By Sam Forgione and Jennifer Ablan
NEW YORK Aug 1 Investors worldwide pulled $4.4 billion out of high-yield junk bond funds in the week ended July 30, marking a third straight week of big withdrawals from the funds, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
The latest outflows from funds that hold the riskier, lower-rated debt brought withdrawals in the past three weeks to $12 billion, according to the report, which also cited data from fund-tracker EPFR Global.
The high-yield market, which typically moves in sympathy with equities, has been on investors' radar after its multi-year rally. High-profile investors have warned repeatedly this year that junk securities were trading at lofty prices.
Dan Fuss, vice chairman of Loomis Sayles, said on Friday: "The market's for sale - finally. In general, we aren't buying the market as a whole. The things we like, I am afraid, are what others like too."
Fuss said he expects junk bonds to come under pressure as financial markets brace for more volatility as investors re-adjust to a higher interest-rate environment. "We're watching the high-yield market and waiting for specific items at specific prices," said Fuss, who helps manage more than $221 billion.
Overall, bond funds attracted $2.2 billion, marking their sixth straight week of inflows.
"Some people are just going to buy fixed income because it's safe ... and also because they've lived through the credit crisis and they have absolutely no interest in living through that again," said Ray Ix, senior vice president at Mount Lucas Management in Newtown, Pennsylvania.
Investors poured cash into stock funds, meanwhile, just before U.S. stocks plummeted on Thursday on problems in overseas economies and concerns about the possibility of an earlier than expected Federal Reserve rate hike.
Stock funds attracted $11.3 billion in new cash, marking their biggest inflows in six weeks. For their part, U.S.-focused stock funds worldwide attracted $5.5 billion of inflows after $7.6 billion of outflows in the prior week. Emerging market stock funds worldwide posted $5.3 billion of inflows, the biggest since January 2013.
David Donabedian, chief investment officer of private wealth management firm Atlantic Trust, with $25.4 billion in assets under management, said: "There has been an awful lot of cash on the sidelines for an awful long time. We've seen an increasing tendency for investors to want to put some of that to work in stocks. There is rising confidence that the economic expansion in the U.S. has legs."
On emerging markets equity inflows, he said: "It's more of a value buy, since emerging markets until very recently have lagged the U.S. market." (Reporting by Sam Forgione and Jennifer Ablan; Editing by Meredith Mazzilli and Tom Brown)