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The outflows from commodities and precious metals funds - which are largely exposed to physical gold - in the week ended April 17 were the most in a reporting history dating back to May 2011. The price of gold bullion tumbled nearly 9% on Monday, shedding more than $125 per ounce in its biggest-ever daily loss.
The gold and commodities weakness in the past week may have raised a red flag over the global economy's growth prospects.
Doug Kass, founder of hedge fund Seabreeze Partners Management Inc, said the price action in gold and other commodities suggests that "global growth is now starting to slow to a rate that jeopardizes the bullish consensus on corporate profits."
Investors at the same time poured $1.68 billion over the week into exchange-traded funds that hold Japanese stocks. There were slight outflows from mutual funds holding Japan stocks, bringing overall inflows into Japanese stock funds to $1.67 billion, the highest on records extending back to 1992.
New cash flocked into Japanese stock ETFs after the Bank of Japan on April 4 unveiled an unprecedented stimulus plan, which will inject about $1.4 trillion into the Japanese economy in less than two years to fight deflation, mainly through purchases of long-term government bonds.
"With the weakness we saw in the US stock market, the Japanese market seems like a good bet," said Lipper analyst Matthew Lemieux.
The big inflows elevated total cash gains into stock funds over the week, with a net $2.7 billion flowing into stock mutual funds and ETFs, up from $1.4 billion the previous week.
Including the inflows into Japanese ETFs, all ETFs that hold international stocks pulled in $1.46 billion in new money, the most since mid-January and reversing four straight weeks of outflows.
Demand for funds that hold US stocks fell modestly, however, with investors committing just $517 million. Mutual funds that hold US stocks attracted just $421.3 million in new cash, the least since early February. ETFs that hold US stocks, meanwhile, attracted slight inflows of $95.7 million.
ETFs are generally believed to represent the investment behavior of institutional investors, while mutual funds are thought to represent the retail investor.
Overall, the inflows into funds that hold US stocks were the least in just three weeks, showing a moderate decline even as US stock markets plummeted over the week.
US stocks posted their worst daily percentage drop since November 7 on Monday, with the S&P 500, Dow Jones industrial average and Nasdaq Composite indexes plunging on the decline in gold prices and weak Chinese economic data.
Gold prices
Gold prices began to drop after Cyprus was forced to sell most of its gold reserves to finance part of its $13 billion bailout.
Recent signs that US Federal Reserve officials may be nearing a decision to start winding down monetary stimulus contributed to the drop, along with weaker-than-expected Chinese economic data.
China's annual rate of growth fell to 7.7% in the first quarter from a year ago, slowing from 7.9% in the fourth quarter of last year.
US precious metal portfolios, which include holdings in gold and gold-related stocks, have been losing money for the past five years with an average decline of 9.9% over that period, according to Morningstar.
Midas Fund
Disappointing US retail sales and consumer sentiment data, and declines in financial shares, also weighed on stocks over the week. The S&P 500 fell 2.25% while the Dow fell 1.24% over the reporting period.
While demand was low for funds that hold US stocks, investors put $4.27 billion in new cash into taxable bond mutual funds and exchange-traded funds, the most in four weeks.
Investors' appetite for Treasury funds rose as $987.7 million flowed into funds that hold the safe-haven bond, the most since November of last year. The iShares Barclays Short Treasury Bond Fund
Among mutual funds, the GMO US Treasury Fund
Investors gave $1.27 billion to investment-grade corporate bond funds, the least since the start of the year. Riskier high-yield "junk" bond funds, meanwhile, attracted $241.8 million, the most since early March.
Investors redeemed huge sums from money market funds, which are low-risk vehicles that invest in short-term securities. The funds suffered outflows of $25.9 billion over the weekly period, the most since August 2011.
The weekly Lipper fund flow data is compiled from reports issued by US-domiciled mutual funds and exchange-traded funds.
