U.S.-based stock, bond fund outflows biggest in five weeks: ICI

By Sam Forgione

NEW YORK (Reuters) - Investors in U.S.-based mutual funds pulled $8.4 billion out of bond funds and $6.3 billion out of stock funds in the week ended Sept. 30 on worries over global growth, marking the biggest outflows from each category in five weeks.

The bond fund outflows marked their 10th straight week of investor withdrawals, while the stock fund outflows reversed the prior week's $2.3 billion in inflows, according to the data on Wednesday from the Investment Company Institute, a U.S. mutual fund trade organization.

Most of the withdrawals from bond funds were from funds that hold taxable bonds, while funds that specialize in tax-free municipal bonds posted smaller outflows, at $588 million.

Withdrawals of $7.2 billion from funds that specialize in U.S. shares accounted for the total outflows from stock funds, while funds that specialize in foreign shares attracted their third straight week of inflows, at $891 million.

Hybrid funds, which can invest in stocks and fixed-income securities, posted $1.9 billion in outflows to also mark their biggest outflows in five weeks.

Major equity indexes around the world declined 10 percent or more from July through September as fears mounted of a global slowdown brought on by China.

"A bunch of people probably voted with their dollars and said, 'look, we’re uncertain, we’re just going to pull out and go to cash for part of our portfolio,'" said Wayne Lin, portfolio manager at QS Investors in New York.

He said bond funds likely bled cash on the global growth concerns as well as worries over a possible 2015 Fed rate hike. Bond funds typically attract cash during periods of risk aversion.

The following table shows estimated ICI flows for the past five weeks (all figures in millions of dollars):

9/30 9/23 9/16 9/9 9/2/2015

Total equity -6,290 2,297 -1,141 -3,544 1,987

Domestic -7,181 67 -3,110 -3,156 1,786

World 891 2,229 1,970 -389 201

Hybrid -1,907 -191 -795 -906 -856

Total bond -8,380 -1,783 -4,516 -2,487 -6,303

Taxable -7,792 -2,400 -3,927 -2,294 -5,806

Municipal -588 617 -589 -193 -497

Total -16,578 322 -6,452 -6,937 -5,172

(Reporting by Sam Forgione; Editing by Diane Craft)

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