Thursday, August 18, 2011

Mutual Fund Investors Pull the Most Amount Out of Market in a Week Since 2008

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Normally when fund investors in the retail crowd pull out en masse, its a net positive - as it would indicate a form of panic bottom.   Last week we saw the biggest level of redemptions since 2008. It appears this date is from Wednesday to Wednesday as it lists 'week ending August 10th', so if so that was during the worst of the selloff with the 2 dramatic downturn days of 5-6%+ specifically in that week.  In the VERY near term that did mark a bottom as we saw the giant rally Thursday but we'll see as we progress if the retail crowd sold at the bottom again or if there is more downward action to go on a break below S&P 1100.

  • Rattled investors pulled more than $40 billion from mutual funds in a single week this month as fears about the global economy intensified. The total of $40.3 billion was the biggest amount removed from mutual funds in  a week in nearly three years, the Investment Company Institute said Wednesday.
  • Stock fund outflows alone were a net $30 billion for the week ended Aug. 10.  That was more than the total for the previous three weeks combined as  investor concerns snowballed.
  • The four-week moving average for stock funds, a less volatile measure of fund flows, rose to an average outflow of $14.8 billion. The previous week's moving average was an outflow of $8.1 billion.
  • The last time investors took more out of stock and bond mutual funds was at the height of the financial meltdown in mid-October 2008 when the weekly total reached $59.6 billion.
  • The week featured the three biggest single-day drops in the market in three years.
  • In a sign that investors are further souring on bonds as well as stocks, the four-week average of investments in bond funds turned negative for the first time since 2011.
  • The last time the four-week average of both stock and bond funds was negative was for the week ended Dec. 23, 2008.
  • This year started off with mutual fund investors putting more money in the market. But they've been net sellers of stocks in every month since April after six consecutive months of adding new money to funds.

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