January 2, 2019 / 11:24 PM / in 14 days

U.S. fund investors yank most cash from stocks since February: ICI

A price monitor is seen on the floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., January 2, 2019. REUTERS/Shannon Stapleton

NEW YORK (Reuters) - U.S. fund investors anguished over economic growth and policies pulled the most cash from stocks in any weekly period since last February, Investment Company Institute data showed on Wednesday.

Mutual funds and exchange-traded funds (ETFs) tracked by the trade group reported $37.8 billion in withdrawals overall, a 12th week of declines and the most cash pulled since a Chinese growth scare in August 2015. More than $21 billion tumbled out of stock funds during the week ended Dec. 26, the most since February 2018.

And while the withdrawals amount to a sliver of the overall assets in such funds, fast-declining sales of funds reflect deteriorating sentiment as people stockpile cash.

The major broad U.S. stock indexes turned in their worst year since the 2008 financial crisis in 2018, as investors adjusted to slowing growth expectations and the Federal Reserve’s attempts to restore U.S. monetary policy to pre-crisis levels of interest rates and unload the bonds it bought to encourage risk-taking. The year ended with a week of major swings up and down in those indexes.

In addition to the rate hikes, investors have been worried about excessive corporate borrowing, U.S.-China trade tensions, a partial U.S. government shutdown and the potential for slowing economic growth.

While ETFs, used heavily by institutional investors, were stock buyers in December, mutual fund investors typically used by retail investors sucked out a record $86 billion, according to preliminary estimates last week from Lipper, a research service.

Withdrawals from funds primarily invested in international stocks hit $9.3 billion, the most cash ever pulled, at least according to records dating to 2013.

And investors cashed in $9.2 billion of shares in bond funds despite strong demand for relatively safe-haven municipals. Funds invested in gold and other assets took in $707 million, the most cash since April.

Reporting by Trevor Hunnicutt; Editing by James Dalgleish

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