Rattled investors pulled more than $40 billion from mutual funds in a single week this month as fears about the global economy intensified.

The total of $40.3 billion was the biggest weekly amount removed from mutual funds in nearly three years, the Investment Company Institute said Wednesday.

Stock fund outflows alone were a net $30 billion for the week ended Aug. 10. That was more than the total for the previous three weeks combined as investor concerns snowballed.

Domestic stock funds alone saw a net withdrawal of $23.5 billion during the week. The four-week moving average for stock funds, a less volatile measure of fund flows, rose to an average outflow of $14.8 billion. The previous week’s moving average was an outflow of $8.1 billion.

Investors pulled a net $4.4 billion from bond funds.

The last time investors took more out of stock and bond mutual funds was at the height of the financial meltdown in mid-October 2008 when the weekly total reached $59.6 billion.

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The withdrawals from Aug. 4-10 outpaced the total monthly withdrawals going back five years, with the exception of October and November 2008.

The week featured the three biggest single-day drops in the market in three years. Investors fled for cover as Standard & Poor’s downgrade of U.S. debt heaped new fear on top of existing concerns about the slowing economy and escalating debt problems in Europe.

In a sign that investors are further souring on bonds as well as stocks, the four-week average of investments in bond funds turned negative for the first time in 2011.

The last time the four-week average of both stock and bond funds was negative was for the week ended Dec. 23, 2008.

This year started off with mutual fund investors putting more money in the market. But they’ve been net sellers of stocks in every month since April after six consecutive months of adding new money to funds.

Hybrid funds, which invest in both stocks and bonds, had estimated outflows of $5.9 billion for the week. That compared with outflows of $1.1 billion the previous week.

 


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