Investors Yank $150 Billion From Stocks for 3rd Year In a Row


Stock market
Stock market

By Hibah Yousuf

The U.S. stock market has been on a bull run since early 2009. At the same time, individual investors have been pulling billions of dollars out of stocks each year.

As the S&P 500 rallied about 13% during the first eleven months of 2012, individual investors yanked about $152 billion from the U.S. stock market, according to data from EPFR Global, a Boston-based firm that tracks fund flows for both mutual funds and exchange traded funds.

That marks the third year in a row that investors have withdrawn more than $150 billion from U.S. stock mutual funds and ETFs.

While individual investors have been shunning the market, institutional investors, such as hedge funds and pension funds, have been significantly adding to their stock positions. They've poured more than $80 billion into stocks so far this year.

"Retail investors and institutional investors have acted in complete opposition since the March 2009 lows," noted Simon Ringrose, managing director at EPFR Global.

retail investors
retail investors

In November alone, individual investors pulled nearly $19 billion out of the market, the most since August 2011, when the debt ceiling debacle and the Standard and Poor's credit rating downgrade took center stage. November's big bleed was a result of more political wrangling in Washington -- this time over the fiscal cliff.

The mass exodus from stocks isn't exactly new. While individual investors have been taking money out of the stock markets since 2005, the outflows accelerated considerably beginning in 2010.

Experts have largely pinned the reason for the stock dump on the Baby Boomer generation.

They represent the largest group among retail investors, and after having their portfolios rocked by the dot-com crash and the financial crisis, they've shifted out of stocks and into bonds much earlier than usual as they head into retirement.

And any money do they do have in the market is consistently going into bond funds, said Ringrose.

Since the beginning of this year, individual investors have plowed more than $90 billion into U.S. bond funds, the most since the record $117 billion in 2009, according to EPFR.

A lack of confidence among investors across age groups has also been a factor, in the wake of high-frequency trading, and incidents like the May 2010 flash crash , Nasdaq's bungled Facebook IPO (FB) and the Knight trading glitch (KCG).

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