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Retail investors panicked even as stocks hit all-time highs

Data: Investment Company Institute; Chart: Andrew Witherspoon/Axios

Investors pulled more than $25 billion out of U.S. equity funds in the week ending July 2, right as the stocks were hitting all-time highs, data shows.

The big picture: It was the second highest level of fund redemptions for domestic stocks since the Investment Company Institute began tracking data in January 2013. ICI's data mainly tracks retail investors who have close to $10 trillion invested in domestic mutual funds and ETFs.

Why it matters: Last week's selloff shows that even when the stock market is rising — the S&P is up nearly 19% so far in 2019 — retail investors are moving out of stocks, showing the opposite behavior of what they've demonstrated during market booms of the past.

  • ICI's data shows that the largest outflows on record were seen during the first week of February 2018, when the market tanked.
  • Investors have been selling stocks in aggregate all year, as concerns grow about the longest U.S. recovery on record and an increasingly uncertain geopolitical and market environment.

Yes, but: "While this outflow may seem [sizable] in simple dollar terms, it's important to realize it represents only .01 percent of the $9.6 trillion invested in domestic equity mutual funds and ETFs as of May 2019," Shelly Antoniewicz, ICI's senior director of industry and financial analysis tells Axios by email.

  • "When viewed in this context, it reinforces the long-term investment mindset of fund shareholders."

Go deeper: Investors are selling stocks, but the market keeps rising