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Some
$8.8 billion was pulled from equities, the largest outflow in 17
weeks, with the redemptions mainly concentrated in U.S. equity
funds after the S&P 500 lost 4.9 percent in the first four
trading days of 2016.
High quality government, municipal and investment grade bond
funds were the big gainers, with some $3.3 billion of inflows.
This was the highest in 11 weeks according to BAML's data, which
also includes numbers from Boston-based research house EPFR
Global.
Investors have taken fright at the huge volatility in equity
markets in the first few trading days of 2016, with developed
and emerging stock markets in freefall following turmoil in
Chinese mainland markets and a sharp move lower in the yuan.
More than 40 percent of the stocks in the benchmark S&P 500 are
now 20 percent or more off their highs, the definition of a bear
market. BAML estimated the global market cap loss at $2.3
trillion over four days of selling.
The benchmark emerging markets index has plummeted to 6-1/2-year
lows, and is on course for a weekly loss of 6.5 percent, its
worst weekly performance since May 2012. Investors pulled some
$500 million from EM equity funds in the week to Jan. 6, the
10th straight week of outflows.
But BAML said the panic selling had not extended across all
equity funds, with Europe and Japan funds attracting a combined
$2.2 billion of inflows.
"Redemption pressures continue and are broadening too, but
weekly flows do not indicate mass investor capitulation," BAML
said.
Investors added $1.9 billion to investment grade bond funds, the
largest inflows in five weeks, $900 million to government bond
funds, and $1.1 billion to municipal bond funds, the biggest
inflows in a year.
There were also modest inflows of $400 million to emerging
market debt funds - the second straight week of inflows after
outflows in 21 of 22 weeks.
(Reporting by Claire Milhench Editing by Jeremy Gaunt)
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