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Investors Keep Pulling Money Out of U.S. Stock Funds

Net redemptions rose to $5 billion in the week ended Wednesday from $2.28 billion the previous week.
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Investors continued to yank their dollars out of domestic stocks funds over the past week and reinvest them overseas.

Funds that invest in stocks saw $4.86 billion walk out the door during the week ended Wednesday, net of redemptions. That was on top of the $580 million in redemptions they sustained during the previous week, according to TrimTabs Investment Research of Santa Rosa, Calif.

Nearly all of the money came out of domestic stock funds, which had net outflows of $5 billion, up from $2.28 billion the previous week.

Funds that invest primarily in non-U.S. stocks took in a net $141 million, although that was down from $1.70 billion the previous week.

"There might be a weak dollar story here," said Vincent Deluard, Global Equity Strategist at TrimTabs. "People want to hold anything but dollars. In a typical recession scenario, people are selling equity funds and buying bonds. Here they're selling U.S. equities to buy international stocks."


Dow Jones Industrial Average

closed at 13,473.90 Wednesday, up slightly from 13,619.89 on Dec. 6.

Investors also pulled money out of bond funds, which had net redemptions of $1.45 billion, reversing nearly all of the $1.57 billion they took in the previous week. Hybrid funds, which invest in both stocks and bonds, had outflows of $634 million, compared with inflows of $684 million during the previous week.

Separately, TrimTabs reports that exchange-traded funds that invest in U.S. stocks took in a net $13.3 billion during this past week, more than making up for the $1.15 billion in redemptions they sustained the previous week.

ETFs that invest in non-U.S. stocks took in $2.78 billion, down from $4.39 billion the previous week. Deluard said the inflows into ETFs may be an indication of some bottom-feeding by institutional investors.