Jittery mutual fund holders redeem $27 billion

The redemptions were triggered by an 8% drop in U.S. stock indexes in June, followed by further deterioration in July.
AUG 15, 2008
Investors redeemed an estimated $27 billion from stock mutual funds in July, according to a report released today by Strategic Insight Inc., a mutual fund consulting firm in New York. The redemptions were triggered by an 8% drop in U.S. stock indexes in June, followed by further deterioration in July and rising economic anxiety, according to the firm. Included money market and bond fund gains, mutual funds as a whole enjoyed net inflows in July of $52 billion. Money market funds experienced net inflows of $75 billion in July, as institutional and individual investors sought safe havens from the volatility that has buffeted stock and bond markets, according to the report. Equity fund net outflows totaled an estimated $27 billion in July. U.S. equity fund outflows totaled $20 billion, while international-equity-fund outflows were $7 billion. Year-to-date through July, all equity funds had experienced modest net outflows, totaling about $20 billion. Bond fund inflows were $4.5 billion in July. Taxable-bond funds drew more net inflows than tax-free-bond funds, which has been the pattern so far in 2008, according to the report. Not included in the above figures: ETFs pulled in $9.4 billion in July across all asset classes, and slightly more than half of those inflows went to domestic-equity ETFs.

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