By Trevor Hunnicutt
NEW YORK (Reuters) - Investors fled U.S.-based stock funds at the fastest rate in a year, Lipper data for the latest week showed on Thursday, as fears over global central bank policy shook markets from their summertime slumber.
Some $14.4 billion fled stock funds in the United States during the seven days through Sept. 14, the data showed, the quickest pace of outflows for the funds since a September 2015 global sell-off that started in China led investors to seek cover.
Global stocks and many bonds sank together on Friday and have traded turbulently in the days since after remarks by Federal Reserve officials pointed to a potential U.S. rate hike even as economic data and market turbulence seemed to push back against the idea.
Notably, Boston Fed President Eric Rosengren said the Fed, long hesitant to raise U.S. interest rates, increasingly faces risks if it waits too much longer so a gradual policy tightening is likely appropriate.
Paul Kim, head of exchange-traded fund strategy at Principal Financial Group Inc (NYSE:PFG), said markets are starting to appreciate that fundamental value will have to drive market prices rather than monetary policymakers. "You're in the last innings of central bank policies being very accommodative," he said. Other categories recorded exceptional outflows, too. Investors pulled $2.9 billion from U.S.-based taxable bond funds, the largest withdrawals for those funds since June, the data showed.
Funds that once courted yield-seeking investors were punished. Utilities sector products posted $459 million in outflows during their seventh straight week of withdrawals. High-yield bond funds posted $2.5 billion in outflows.
Emerging-market bond funds posted $52 million in outflows, according to the research service, a small number nonetheless marking a turn for a category that has taken in money almost every week since June.
Energy sector funds posted $907 million in outflows, the data showed, the largest withdrawals since oil's price was tanking in fall 2014. Crude has been unable to hold its peak for the year, which it forged early in the summer.
Technology sector funds recorded $1.3 billion in outflows, the largest withdrawals since Feb. 2015. Shareholders also demanded redemptions from healthcare and real-estate sector funds.
Investors pulled $685 million from precious metals funds - the most since July 2015 - signaling a potential rate hike this year. The relative value of non-yielding gold often slips as returns on other assets grow.
Treasury funds took in $447 million, even as long-maturity government bonds sold off, a sign of investors spotting a buying opportunity, said Pat Keon, research analyst for Thomson Reuters Lipper.