US mutual fund investors sold stocks and piled into bonds for the eighth straight week, Investment Company Institute (ICI) data showed on Wednesday, indicating some investors still doubt the economy's stamina after a shaky first quarter. Investors withdrew $3 billion from US-based stock funds, adding to a streak that has swept nearly $35 billion from the funds, according to ICI data.
"Retail investors are definitely jittery," said Morningstar Inc analyst Jason Kephart. "Stocks haven't really gone anywhere in the last year and investors are probably still feeling the aftershocks of a pretty volatile first quarter." If anything, the negative sentiment around stock funds is understated by the current pattern of withdrawals. Over the last year, the funds have recorded outflows in 39 of 52 weeks, ICI data showed.
The heavy outflows may portend a longer run for US stocks, even with the benchmark S&P 500 up 14.5 percent from a February low. "I have never seen an environment where investors are so scared of public equities for such an extended period of time," said Richard Bernstein, chief executive of Richard Bernstein Advisors LLC. "This is the kind of environment you want to invest in. When everyone is scared, you want to be the provider of scarce capital." Investors pulled $2.4 billion from US-based funds focused on domestic companies and another $649 million from international stock funds, according to data for the week ended May 4.