Global Stock Funds Post Biggest Investor Withdrawals Since 2008

Friday, 12 Aug 2011 02:31 PM

 

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Investors pulled the most money from global stock funds since 2008 in the past week as the Standard & Poor’s downgrade of Treasuries and the deepening European debt crisis prompted a flight into cash and gold.

Funds that buy global equities suffered $3.5 billion in net withdrawals in the week ended Aug. 10, the most since the second week of October 2008, according to Cameron Brandt, director of research at Cambridge, Massachusetts-based EPFR Global. Investors removed $11.7 billion from funds that invest in U.S. equities, the most since May 2010, following a one-day market plunge that erased $862 billion in U.S. stock values.

“This week had a feeling of capitulation as we saw investors running for cover,” Brandt said in a telephone interview. “The last time we saw this kind of flight to safety” was in 2008, he said.

Investors have rushed into money-market funds and gold as global equity markets lost $6.8 trillion in value since July 26. On Aug. 5, S&P downgraded U.S. debt for the first time, sending the benchmark Standard & Poor’s 500 Index down by 6.7 percent on the first trading session after the move. In Europe, riots swept across Britain and the sovereign-debt crisis deepened.

U.S. money funds attracted $61 billion in the week ended Aug. 9, according to data from iMoneyNet in Westborough, Massachusetts. Gold and precious metals funds drew $2.1 billion in the past week, EPFR said.

The S&P 500 recovered some losses as it rose 4.6 percent yesterday and 1.4 percent as of 11:56 a.m. today in New York.


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