Equity Fund Outflows Surge, $4.29 Billion From U.S.

(Bloomberg) -- Investors withdrew a net $4.95 billion from equity funds and added $5.06 billion to bond funds in the week to Sept. 2, amid concerns about the strength of a world recovery, EPFR Global said in a report. “They struggled to make the connection between equity markets at 10 to 12 month highs and a global economy that has digested the bulk of the fiscal stimulus packages served up in recent months but continues to shed jobs,” wrote the EPFR, which tracks funds with $10 trillion worldwide. “Going into September they steered the cash they once again pulled out of Money Market Funds into fixed income rather than equity funds.”

U.S. equity funds incurred net outflows of $4.29 billion and emerging-market funds also saw withdrawals, EPFR said in an e-mailed statement. Emerging-market funds for equities in Asia excluding Japan received a net $67 million, while China funds got $200 million, the fund tracker reported.

China’s Shanghai Composite index tumbled 22 percent last month amid concern the government will tighten monetary policy to avert asset bubbles. It has since rebounded, rising 6.7 percent in the past three days. Premier Wen Jiabao said this week the government will maintain a moderately loose monetary policy. The MSCI World Index has fallen 2.7 percent this week, while the MSCI Asia Pacific Index lost 1.1 percent.