Investors pull record amounts out of U.S. stock funds

U.S. stocks have hit all-time highs this year, but not everyone in the market will be celebrating. Investors have pulled more money out of US-focused equity funds than in any year on record.

Investors have taken a total of more than $156bn out of mutual and exchange traded funds this year, according to data from Refinitiv Lipper, the highest annual figure since the company started collecting data in 1992.

Equity mutual funds had outflows of $248bn, while $92bn was drawn into equity ETFs. Investors have been funnelling money into bonds and money-market funds, which are seen as havens in periods of uncertainty.

Individual investors’ asset positioning has been very, very cautious and there’s been a lot of de-risking going on,  said Kasper Elmgreen, head of equities at Amundi, the asset manager.

U.S. stock-focused funds last saw large outflows in 2016, when investors pulled out $112bn amid market anxiety over the US election and Donald Trump’s surprise win. One of the main factors hampering investor confidence this year has been uncertainty around US-China trade relations, as well as anxiety that a recession is looming.

Some analysts think this could support a continuing market rally if economic headwinds ease.

“A positive conclusion to US-Sino trade negotiations is expected to make a meaningful difference to general investor sentiment,” said Gerrit Smit, head of equity management at London-based Stonehage Fleming. “Many investors may find themselves left behind on the sidelines, with a difficult decision whether to buy back their shares at higher prices.”

Source: Financial Times