(Adds additional flow data, analyst comments)
By Sam Forgione
NEW YORK, Jan 9 (Reuters) - Investors worldwide pulled $12.1 billion out of stock funds in the week ended Jan. 7 after concerns over global growth hurt risk appetite at the start of the year, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
Investors soured on funds that specialize in U.S. stocks and pulled $12.8 billion. Those withdrawals accounted for the lion’s share of the week’s total outflows from stock funds, while emerging market stock funds and European stock funds also posted outflows at $1.3 billion and $300 million, respectively.
The outflows from emerging market stock funds marked their eighth straight week of investor withdrawals. Japanese stock funds found some support with $500 million in new cash.
The total outflows from stock funds came after investors poured nearly $160 billion into the funds in 2014, showing healthy demand but down from record inflows in 2013, according to data from EPFR Global.
“Investors are being a little bit skittish and taking some profits,” said Arun Bharath, chief investment strategist at Bel Air Investment Advisors in Los Angeles, on the outflows from stock funds.
“There are clearly some concerns that what is happening outside of the U.S. may impact the U.S. at some point,” he said, citing weak economic data in Europe, China, Russia, and Brazil.
A further drop in oil prices also stymied demand for stocks. U.S. crude hit a 5-1/2-year low of $46.83 on Jan. 7, and the benchmark S&P 500 stock index fell 1.6 percent over the weekly period after gaining 11.4 percent, or 13.7 percent on a total return basis, in 2014.
Bond funds attracted $5.3 billion in inflows, their biggest in eight weeks, according to the Bank of America Merrill Lynch report. The funds attracted $150.6 billion in new cash in 2014, according to EPFR Global data.
Investment-grade bond funds attracted $5.4 billion after record inflows of $202.4 billion in 2014, according to data from the report and EPFR Global. Funds that specialize in safe-haven U.S. Treasuries attracted $1 billion over the week.
“We believe there is not a whole lot of value left in investment-grade and we are underweight investment-grade bonds,” Bharath said. The benchmark Barclays U.S. Aggregate Bond Index rose 6 percent in 2014.
The latest inflows into bond funds came as Treasuries prices rallied over the period, with 30-year yields hitting a roughly 2-1/2-year low of 2.47 percent on Jan. 6. (Reporting by Sam Forgione; Editing by Chizu Nomiyama and Frances Kerry)