By Abhinav Ramnarayan
LONDON (Reuters) - Investors cashed out of equity funds at a record pace over the past week, with redemptions hitting $39 billion, Bank of America Merrill Lynch (NYSE:BAC) (BAML) said on Friday.
Investment grade bond fund outflows also touched a record high of $8.4 billion up to Wednesday, in what was a "capitulation out of stocks, investment grade (and) financials," according to BAML.
U.S. stocks had a similarly torrid week, with U.S. equity funds recording their second-largest ever week of redemptions at $27.6 billion, the bank said in a note after analyzing EPFR flow data.
This meant that year-to-date outflows from U.S. equity funds is also around of $27.6 billion, with the number being essentially flat the week before last.
With Britain's Brexit political drama intensifying, investors have now pulled $9.8 billion out of UK equity funds so far in 2018, more than in any previous year.
But year-to-date inflows into Japanese equities at $63.57 billion and emerging market stocks at $50.92 billion helped keep the overall equity flows overwhelmingly positive for 2018 at $74 billion.
It has been a different story for high-yield and investment grade bond fund this year so far, with record redemptions of $63 billion.
Investors retreated to the safety of government bonds, with those funds recording $3.2 billion of inflows over the past week, $20 billion over the past 10 weeks, and $46 billion year-to-date.
"Investors have no satisfactory answers to the existential questions of 'If not stocks, what?', 'If not tech, what?' (and) 'If not the U.S. dollar, what?'" BAML researchers said in the note.