Investors Pulling Money from U.S. Stock Funds as Markets Notch New Highs

It might seem counter intuitive, but it’s happening.

Even as the major U.S. stock indices reach record levels, U.S. investors are draining money from mutual funds and exchange-traded funds with exposure to the stock market.  Investors yanked out $4.5 billion last week, extending the longest streak of withdrawals since the spring of 2016.

At the same time the S&P is up 3% for the year already, more than double the gains of any other developed nation.

Investors are looking for a safe haven for the dollars, and have chosen taxable and tax-free municipal bonds.  Last week investors plowed $17 billion into bond funds, after investing $24.7 billion into such funds the week before.

That leaves hedge funds and institutions as the main buyers of U.S. equities.  If we get a pull back in the markets, individual investors will be the ones that bought low and sold high.

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