Investors pull cash from stock funds, add to bonds

A net $12.7 billion was withdrawn from U.S. stock funds last month, industry consultant Strategic Insight said on Friday. It was the biggest monthly net withdrawal this year, despite the 1 percent rise last month in the Standard & Poor's 500 index. Through July, nearly $28 billion has been pulled out.

"Investors continue to dismiss the positive trends reflected in steady gains in the economy, employment, real estate prices, and the stock market," said Avi Nachmany, research director with New York-based Strategic Insight.

Investors instead appeared to be focus on avoiding the potential for short-term losses, Nachmany said.

Although cash flowed out of U.S. stock funds last month, investors deposited a net $1 billion into funds investing in foreign stocks. Year-to-date, international stock funds have attracted $34 billion in new cash.

Here are additional details about how investors moved their money in June, according to Strategic Insight:

BOND FUNDS: July's net deposits of $29.2 billion into bond funds came mostly from taxable bond funds. Those funds, which primarily invest in corporate bonds, attracted a net $23.8 billion, about twice as much as June's total. An additional $5.4 billion was deposited into municipal bond funds, which invest in bonds issued by state and local governments.

Through the first seven months of the year, bond funds have attracted a net of about $179 billion in cash. That's about 50 percent more than net deposits into bond funds for all of 2011. Bond fund deposits have exceeded withdrawals for 11 months in a row, beginning last September.