LONDON Some $14.5 billion was pulled from U.S. equity funds in the week to Wednesday, the largest outflows for 82 weeks, data from Bank of America Merrill Lynch (BAML) showed, as doubts grew about the "Trumpflation" rally.
Investors piled into U.S. stock markets in the wake of Donald Trump's election as U.S. president in November, betting that his campaign pledges to cut taxes and boost spending would fuel growth and inflation.
Wall Street .SPX rallied to record highs in the first quarter but took a dive after Trump failed to push a key healthcare reform bill through Congress, raising doubts about the rest of his program.
On Friday, BAML data tracking investment flows showed a third straight week of outflows from U.S. equity funds. Europe, Japan and emerging market equities all attracted net inflows, with the latter pulling in $2.4 billion.
Emerging market stocks .MSCIEF are up 12.8 percent in dollar terms year-to-date, topping a BAML table of cross-asset winners and losers. Indian, Mexican and Korean equities were the top performers, all returning more than 16 percent in dollar terms.
By contrast, U.S. equities have returned 5.8 percent, ranking just 16th in the BAML league table of equity market performance.
The selling from U.S. equity funds was broad-based, with investors pulling $10.3 billion from U.S. large caps, $1.7 billion from U.S. value funds, $2 billion from U.S. growth funds, and $900 million from U.S. small caps.
These outflows dwarfed the inflows into the other equity segments, so overall, equity funds suffered $7.4 billion of outflows, the largest in 40 weeks.
Conversely, bond funds attracted $12.4 billion overall, an eight-week high, with $6.7 billion of inflows to investment grade bond funds, the largest in eight weeks, and $3.1 billion for high-yield bond funds, the first inflows in five weeks.
Emerging market debt funds also continued to attract interest from investors looking for yield, with inflows of $2.2 billion.
(Editing by Louise Ireland)