Equity funds chalked up their longest run of outflows since 2009 in the latest week and gold funds attracted the second biggest inflow in six years as the turmoil sweeping global markets continued, Bank of America Merrill Lynch said on Friday.
Despite investors' deepening bearishness and increased demand for safe-haven assets, however, the selloff in stocks is still only in a "correction" phase and does note yet reflect a full-blown bear market or recession, BAML said.
Rising concern over global growth and central banks' ability to respond effectively have rocked financial markets since the turn of the year, hitting stocks and oil and boosting safe-haven assets like cash, bonds and gold.
Investors pulled a net $6.8 billion out of equity funds in the week to February 10, but unlike previous weeks during the current selloff, that was across all regions around the world.
It was the sixth weekly redemption in a row, something not seen since 2009, and brought the total outflow over the last six weeks to $41 billion, said BAML, which also uses data from fund research house EPFR Global.
That exceeds the $36 billion outflow around the market sell-off in August last year, but is still well short of the $90 billion outflow around the U.S. debt ceiling crisis of August 2011, the $85 billion around the 2008 crisis and $65 billion redemptions in the 2002 bear market decline, BAML said.
"Cash is high, markets are oversold and clients are rhetorically bearish, but frustratingly, flows don't yet reveal true investor capitulation," BAML's global investment strategy team led by Michael Hartnett said in a note on Friday.
"We remain sellers of any and all counter-trend rallies unless profit/growth expectations can reverse higher or we get a big-bang coordinated global policy response," they said.
Precious metal funds posted a net inflow of $1.6 billion, the second largest in six years, BAML said, as gold rallied to a one-year high above $1,260 an ounce.
Government bond and Treasury funds pulled in a "robust" $2.7 billion, the sixth straight weekly inflow, and investors poured $24.3 billion into money market funds, essentially cash.