Bonds more popular than stock mutual funds

Surging stock prices in October weren't enough to entice mutual fund investors back into the market. Instead, bonds continued to hold appeal.

Investors withdrew a net $17.6 billion from stock mutual funds last month, industry consultant Strategic Insight said Friday. It was the sixth consecutive month of net withdrawals, which total $97 billion over that period.

October's retreat came as the Standard & Poor's 500 index returned nearly 11 percent, its best month since December 1991.

Last month's exit from stock funds appeared to be a reaction to the market decline in August and September, when stocks tumbled more than 12 percent. "Investors seem to be suffering from volatility fatigue," said Avi Nachmany, research director with New York-based Strategic Insight.

Stock funds attracted new cash during the first four months of this year, following last fall's strong market gains. But since then, investors have been pulling their money from stock funds and depositing it in bond funds. It's a pattern that became entrenched after the 2008 financial crisis. That more conservative investing attitude was again apparent last month, when investors deposited a net $20.8 billion into bond funds.

About $18.9 billion of that total went into taxable bond funds, a category that includes corporate bonds. It was the largest monthly flow of money into taxable bond funds since May's figure of $20 billion.