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Mutual Fund Investors Head for Exits

Shareholders yanked a record $1.86 billion out of equity funds in the week ended Wednesday.
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Mutual-fund investors made for the exits in record numbers over the past week as the stock market sank.

Investors pulled a net $19.86 billion from stock funds over the five business days ended Wednesday, according to TrimTabs of Santa Rosa, Calif. -- more than in any week since the company began tracking fund activity in 1998.

The outflows were in sharp contrast to the prior week, when investors added a net $6.24 billion to stock mutual funds.

The

Dow Jones Industrial Average

closed Wednesday at 12,861.47, down about 5% from the previous week.

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Equity funds that invest primarily in U.S. stocks suffered the most withdrawals, losing $12.87 billion, compared with the previous week, when they took in a net $2.09 billion.

Equity funds that invest primarily in non-U.S. stocks saw $6.98 billion walk out the door, more than offsetting the $4.16 billion they accrued in the previous week.

Investors pulled money out of bond funds, too albeit much less than in the previous week, as ultra-safe Treasury bonds rallied on safe-haven buying. Bond funds as a group had outflows of $1.56 billion, down from $7.07 billion during the previous week.

Investors also pulled $6.82 billion out of hybrid bonds, which invest in both stocks and bonds, more than twice as much as the $3.09 billion the previous week.

While retail investors fled mutual funds, exchange-traded funds appeared to benefit from increased bargain-hunting. These baskets of stocks that track indices pulled in a net $8.91 billion during the past week, although that was down from $11.82 billion during the previous week.

ETFs that invest in consumer discretionary ETF were among the big beneficiaries, taking in $662 million. Conrad Gann, president and chief operating officer of TrimTabs, said this indicates "some institutional buyers are taking a more bullish stand with regard to consumer discretionary stocks."

Investors pulled $123 million from ETFs that invest in non-U.S. stocks, but that was down from $790 million during the previous week.