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Equity Funds Shed $46 Billion In Four-Week Run Of Outflows: BAML

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Investors pulled another $19 billion from equity funds over the past week as they sought safety in government bond funds, which have enjoyed the longest run of inflows in four years, Bank of America/Merrill Lynch said on Friday.

The exodus from emerging markets also continued, with losses extending into their ninth week due to sluggish growth and increasingly messy politics in a range of developing countries.

Emerging equity funds shed $4.5 billion, while U.S. equities saw outflows of $15.9 billion and European stocks lost $800 million. Japanese funds were the only category to post inflows.

The data, which also includes flow figures from data provider EPFR Global, showed that global equity funds had shed $46 billion over the past four weeks.

Year-to-date outflows from emerging stocks total $58 billion, BAML said in its report.

Latin American equity funds have been hit particularly hard, with 2015 outflows amounting to more than a fifth of assets under management, a trend that may gather pace after Brazil’s credit rating downgrade to junk for the first time in seven years.

In the past week Brazilian equity funds saw outflows equivalent to 1 percent of their assets under management, BAML said.

The MSCI world stocks price index .MIWD00000PUS is down 1 percent this month, adding to August’s 7 percent loss, which was the worst since mid-2012. Markets are convulsed by fears of an economic crisis in China and tepid global growth which could be nipped off if the Federal Reserve decides to raise U.S. interest rates for the first time in almost a decade.

“Trading rules all say “buy” and risk assets have stabilized over the past week … but investors are struggling to add risk here because of 1) the lack of growth momentum 2) expectations of an “event” in emerging markets/commodities/Wall St and 3)a widespread view of lack of liquidity making bonds/stocks untradable,” analysts at the bank said.

Investors are scurrying instead for safer bonds, with government debt and U.S. Treasury funds receiving $1.4 billion, their 10th straight week of inflows. High-yield and emerging debt funds recorded modest losses for the seventh week in a row.