Mutual fund investors, rattled by an increasingly volatile stock market, withdrew $4-billion from equity funds in the week ended Wednesday, more than in any single week in the last four years, according to data released Friday.
The withdrawals represented about three-tenths of 1 percent of the assets in stock funds, according to AMG Data Services of Arcata, Calif., an independent fund-tracking company. The withdrawals were the biggest ever recorded in AMG's data base, which dates to January 1992, and the first since October of last year.
The data do not reflect investor activity Thursday and Friday, when the stock market exhibited considerably less volatility. Indeed, a few fund companies reported that cash flows to stock funds turned positive Thursday and Friday.
But AMG president Robert Adler said withdrawals through Wednesday continued the several-week-old trend of declining cash into stock funds.
Significantly, the most recent outflows from equity mutual funds broadened from the slowdown noticed in previous weeks. Cash flows to aggressive growth and emerging growth stock funds _ which focus on smaller stocks and are generally more volatile than funds that track the broad market _ have been declining for several weeks.
But in the most recent period, even large-cap stock funds experienced net redemptions by shareholders of $1.3-billion.
"There has been a gradual erosion of investor sentiment," Adler said. "This has been occurring for some time. What has changed is the size of redemptions and the fact that they are not limited to technology funds, but have expanded to the large-cap sector."
While the withdrawals for the week ending Wednesday measured less than 1 percent of the total assets in stock funds, in dollars they totaled more than half the $7.5-billion that was withdrawn from equity funds in October 1987, the month of the market crash. At that time, however, equity mutual fund assets totaled $180-billion, so the outflows measured 4 percent of assets. Now, assets in equity mutual funds total $1.5-trillion.
The Investment Company Institute, the mutual fund trade group that tracks cash flows on a monthly basis, most recently estimated that net inflows to stock funds fell to $15.5-billion in June from $25.1-billion in May. A final report on May cash flows is due out near the end of the month, and the institute will estimate July cash flows in early August.