Money was withdrawn from stock mutual funds for the 23rd consecutive week during the period ended Dec. 26 as investors watched negotiations in Washington to try to avoid the "fiscal cliff." Bond funds continued to attract new money.
The movement of cash was in line with the conservative approach that many investors have taken since the financial crisis of 2008. Money has consistently been withdrawn from stock mutual funds and added to lower-risk bond funds.
Investors withdrew a net $3.64 billion from U.S. stock funds, the Investment Company Institute said in a preliminary report Wednesday. That compared with withdrawals of $5.28 billion for the week ended Dec. 19. Withdrawals have exceeded deposits each week since mid-July.
Cash was pulled out as the Standard & Poor's 500 index fell 1.1 percent during the weeklong period ended Dec. 26. Investors were concerned by the lack of progress in Washington on negotiations to avoid the fiscal cliff, which would have meant a series of sharp government spending cuts and tax increases. Those changes had been scheduled to start Jan. 1, but Congress approved an agreement on Tuesday to avoid the cliff.
The ICI said a net $363 million was deposited during the week into funds investing primarily in foreign stocks, up from $289 million in the previous week.
Investors deposited a net $2.46 billion into bond funds during the period ended Dec. 26. That's up from net deposits of $427 million during the previous week.
A net $3.14 billion was deposited into taxable bond funds, which primarily invest in corporate bonds. But investors pulled $685 million out of municipal bond funds, which invest in bonds issued by state and local governments.
During the latest week, a net $757 million was deposited into hybrid funds, which invest in both stocks and bonds.
Overall, investors withdrew a net $61 million from long-term mutual funds of all types during the week, compared with net withdrawals of $4.59 billion in the previous week.