The biggest stock market declines in nearly eight decades sent investors fleeing to U.S. government debt, bank deposits and money-market funds, considered the investments least likely to suffer losses.
Investors pulled a record $127 billion from U.S. stock and bond mutual funds in October as they sought the safety of Treasurys and cash, according to the Investment Company Institute.
Withdrawals and investment losses reduced fund assets to $9.6 trillion as of Oct. 31, a 22 percent drop from the $12.3 trillion peak in May, data compiled by the Washington, D.C.-based trade group show.
Investors removed $41 billion from bond funds in October, compared with redemptions of $973 million in September.
Withdrawals from stock mutual funds increased 29 percent to $72 billion.
Most Read Business Stories
- Seattle among top markets as U.S. home prices increase by double-digit percentages for the first time in years
- Another top Amazon executive to leave company
- Boeing 757 bound for Seattle makes emergency landing
- Alaska Airlines ordered to pay $3.2M to family of woman who died after escalator fall
- T-Mobile casts aside low-budget reputation with new $90 plan
The biggest stock-market declines in nearly eight decades sent investors fleeing to U.S. government debt, bank deposits and money-market funds, considered the investments least likely to suffer losses.
Investors stepped up their flight from stock and bond funds in mid-September after Lehman Brothers Holdings declared bankruptcy and world governments took steps to rescue ailing banks.
The average diversified U.S. equity fund declined 48 percent this year through Nov. 21, according to Morningstar. The average non-U.S. fund plunged 54 percent. Diversified funds aren’t limited to buying stocks in a single industry, such as autos or food.
Investors returned to money funds in October, having abandoning them in September after losses by Reserve Primary Fund.
Money-market funds received $142 billion in October, bringing their total to $3.59 trillion, compared with withdrawals of $88 billion in September, ICI said.
The Reserve Primary Fund became the first money fund in 14 years to drop below $1 a share, known as breaking the buck, after its investments in Lehman Brothers bonds lost value.