U.S. mutual fund investors dumped stocks and bonds during the latest week, delivering both categories their worst respective outflows of the year, Thomson Reuters' Lipper data showed on Thursday.
The $6.7 billion pullback from taxable bond mutual funds marks a change of heart after the funds heavily used by retail investors inhaled tens of billions in bonds since last year.
The U.S. Federal Reserve is on a path to raising interest rates from very low levels even as economic data has remained mixed. Rising rates are seen as a drag on bond fund returns.
Meanwhile monetary policy officials, including European Central Bank President Mario Draghi, made comments this week implying a global turn away from ultra-easy stimulus policies. Yields on the 10-year Treasury benchmark leapt from 2.14 on Monday to 2.27 on Thursday.
Riskier high-yield bond mutual funds and ETFs posted $1.7 billion in withdrawals, their worst outflows since March, the data showed.
"I wouldn't be surprised if it becomes more consistent than we've seen in the past - money leaving taxable-bond funds," said Pat Keon, Senior Research Analyst at Lipper.
"It's just a question of where does it go because equity funds are distasteful for a lot of people."
Mutual fund investors cashed out a net $7.3 billion from domestic stocks. ETF investors pulled an additional $4.2 billion from funds focused on U.S. company shares, adding to the equity market's woes.
The S&P 500 has managed a 0.5 percent gain this month despite a dramatic selloff for oil and some of the year's most high-flying technology stocks.
Investors had bid up high earning growth stocks in hopes that they would continue to eek out gains in a tepid U.S. economy that is still supported by the easy monetary policy that has been in place nearly a decade after the 2007-2009 global financial crisis.
Meanwhile, foreign stocks continue to find favor among U.S. investors. Japanese equity funds pulled in half a billion dollars during the latest week, their largest haul since February.
Within U.S. stocks, violent rotations between sectors continue.
Finance sector funds posted $1.2 billion in outflows, the most since March, even as the Fed approved large banks' plans to use extra capital for stock buybacks, dividends and other purposes beyond being a cushion against catastrophe.
Healthcare funds pulled in $1.7 billion and the most cash since November 2016 as Congress aimed to pass an Obamacare replacement bill.
Rate-sensitive real estate and utilities sectors posted their largest withdrawals of the year.