The spike in market volatility in August led investors to withdraw a combined $33.6 billion from U.S. stock and bond mutual funds during the month, research firm Strategic Insight reported Wednesday.
August was the third straight month of net withdrawals, following net outflows of $16 billion in July and $2 billion in June. From January through May, net inflows averaged more than $27 billion a month.
In an e-mail, Loren Fox, a senior research analyst with the firm, noted that August’s net outflows, excluding money market funds and ETFs, were the highest since the $38 billion in net outflows in December 2008.
For August, investors pulled $21.4 billion from domestic equity funds and $1.4 billion from international equity funds. Investors withdrew another $9.7 billion from taxable bond funds and $1.1 billion from tax-free bond funds.
The outflows from equity funds peaked during the second week of August, as market volatility reached a crescendo, and then “slowed to a pace more in line with recent months’ activity,” according to a Strategic Insight news release.
In the release, Avi Nachmany, Strategic Insight’s director of research, noted that withdrawals prompted by stock market declines “tend to be limited in scope and short-lived.” But he added that lingering doubts about the U.S. economy and Europe’s debt problems “are reducing investors’ appetite for equity risk.”
Meanwhile, money market funds enjoyed net inflows of $69 billion for August, partially reversing outflows of $113 billion in July.