Citing data from Thomson Reuters' Lipper service, a Reuters report said investors of US-based stock mutual funds pulled out $6.51 billion in the week that ended December 11. This was the biggest weekly outflow this year, prompted by concern that the US Federal Reserve would begin tapering as early as next week. The stock mutual fund outflows in the period reflected the largest withdrawal in two years, the report said. Consumers of mutual funds are usually retail investors.
The report quoted Lipper Head of Americas Research Jeff Tjornehoj as saying, "There was some reason for caution. No one wants to be left at the top of the market." The monthly bond purchases of the Federal Reserve, which amounted to $85 billion each month, helped increase the benchmark Standard & Poor's 500 Index 24.5% in 2013. It has also kept interest rates at low levels, which led to investors to riskier investments like stocks in search for higher returns, the report added.
After Lipper's weekly report, however, the index dropped 0.6% as economic data and a Washington budget deal fueled fears that the Fed will start reducing its purchases when it next meets on December 17 to 18. The report said the stock mutual fund outflows became even more apparent since investors have invested cash into the funds nearly every week for 2013. Tjornehoj said the drop in the US stock market in the weekly period before the scheduled meeting of the Fed served as "the impetus for some retail investors to act before things got worse."
For the year, the recent stock mutual fund outflows represented the third full week of withdrawals. However, the report said the latest outflows trumped the size of the other two weeks of withdrawals which happened in October this year. The consecutive withdrawals totaled only $435 million, the report said.
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