Fund-flows data shows that investors are fleeing U.S. stocks but nibbling at global investments

BlackRock (BLK ) fund-flows data shows that August saw the biggest exodus of investors from the market in more than three years, at least measured by assets in exchange-traded funds.

An exodus of $16.1 billion in ETF outflows, to be specific with more than 80% of that coming from the widely held SPDR S&P 500 ETF (SPY ).

Take this, according to the Wall Street Journal :

Questions about when and if the Federal Reserve will reduce its stimulus efforts have dominated the past month, with the threat of U.S. military strikes against Syria fraying nerves earlier this week.

Rising interest rates also shook ETF investors out of bond ETFs, which were poised to see outflows of $6.8 billion. Augusts outflow was setting up to come in shy of the $7.3 billion that poured out of bond ETFs in June, when Federal Reserve Chairman Ben Bernanke first said that the central bank could begin to dial back its monthly bond buying this year.

Mutual fund data show similar caution in stocks. Stock mutual funds saw their stream of cash slow in August, but still was on pace to see inflows, according to preliminary data from Lipper. Some $10.8 billion came into stock mutual funds in August, compared with an inflow of $22 billion a month earlier.

Bond mutual funds were set to see inflows for the first time since May, taking in $3.8 billion.

In other words, investors are starting to bail out on stocks and move into lower-risk investments like bond funds. This is incredibly telling, especially considering that long-duration bond funds are widely acknowledged to be one of the worst investments in an environment where interest rates are rising.

So does the market not believe that the Fed will be tightening policy and raising rates in the near future? Or do they just not care because they think the risk in stocks is even greater than being in a bond fund as rates rise?

To be fair, outflows away from stock & bond ETFs were offset by modest inflows to international equity funds, which took in $5.6 billion according to the latest data. So there is some money moving into stocks just not U.S. stocks.

Where equities or bonds go from here is anyones guess. But the sheer size of the amount of money being moved is noteworthy.

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Jeff Reeves  is the editor of InvestorPlace.com and the author of  The Frugal Investor’s Guide to Finding Great Stocks.  Write him at  editor@investorplace.com  or follow him on Twitter via  @JeffReevesIP . As of this writing, he did not own a position in any of the stocks named here.