Cash pulled from stock funds 21st straight week

Investors pull cash from stock mutual funds for 21st straight week, add to bond funds again

Associated Press

WASHINGTON (AP) -- Investors withdrew money from stock mutual funds for the 21st consecutive week during the period ended Dec. 12, increasing the pace of withdrawals from the prior week. Bond funds continued to attract new money, as they have during all but one week this year.

The movement of cash was in line with the conservative approach that many investors have taken since the financial crisis of 2008. Money has consistently been withdrawn from stock mutual funds and added to lower-risk bond funds.

Stocks:

Investors withdrew a net $7.23 billion from U.S. stock funds, the Investment Company Institute said in a preliminary report Wednesday. That was up from net withdrawals of $5.85 billion for the period ended Dec. 5. Withdrawals have exceeded deposits each week since mid-July.

Cash was pulled out as the Standard & Poor's 500 index rose 1.3 percent during the weeklong period ended Dec. 12. Investors have focused on developments from Washington in budget talks to avoid the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit.

The ICI said a net $1.25 billion was withdrawn during the week ended Dec. 12 from funds investing primarily in foreign stocks. Cash has been pulled out of foreign stock funds for 20 of the past 21 weeks, dating to mid-July.

Bonds:

Investors deposited a net $1.79 billion into bond funds. The latest week's total is down from net deposits of $5.22 billion during the previous week.

Most of last week's bond fund total was from cash flowing into taxable bond funds, which primarily invest in corporate bonds. Those funds attracted nearly $1.58 billion in new cash. Municipal bond funds took in nearly $211 million. Those funds invest in bonds issued by state and local governments.

A net $119 million was deposited into hybrid funds, which invest in both stocks and bonds.

Overall investors withdrew a net $6.57 billion from long-term mutual funds of all types during the week, compared with net withdrawals of about $2.02 billion in the previous week.

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