LONDON (Reuters) - Global equity funds saw massive outflows this week, a sharp reversal from last week’s inflows as pessimism over economic growth gripped investors once again, driving them instead to search for yield in credit and buy safer assets like bonds.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2019. REUTERS/Brendan McDermid

Some $20.7 billion was pulled from equity funds in the week to March 20, while $12.1 billion was ploughed into bond funds, the biggest inflows since January 2018, Bank of America Merrill Lynch (BAML) strategists said on Friday citing data from EPFR.

Despite big gains for stocks globally this year, positioning is decidedly negative with $66.8 billion outflows from equity funds year-to-date.

This week’s heavy outflows showed investors remain skittish, having re-entered equities with $14 billion inflows last week.

Investors are hunting for yield, the strategists said, noting the ninth straight week of inflows to investment-grade bond funds - $6.6 billion this week - while high-yield bond funds drew in $3.2 billion and $1.2 billion went into EM debt.

The market is struggling to digest a rapid about-turn from the U.S. Federal Reserve on interest rates as economic growth disappoints globally and fears of a deflationary environment return.

“Extraordinary abrupt end to central bank hiking cycle & Fed paranoia of credit event are uber-bullish credit & uber-bearish volatility,” the strategists wrote.

“Inflows to ‘deflation assets’... continue to trounce inflows to ‘inflation winners’,” they added.

Overall the bank’s “Bull & Bear” indicator of investor positioning and sentiment held at a neutral level of 4.7 out of 10, signalling investors’ uncertainty over where the market might go next.

By region, the U.S. saw the biggest outflows with $13.2 billion, while $4 billion was pulled from European equities.

“Short European equities” was named by investors as the “most crowded” trade in a BAML survey on Tuesday, prompting some contrarian buying of European stocks, but not enough to move the needle in terms of flows.

Japanese equities also suffered outflows of $700 million, the sixth straight week of outflows. Emerging market equities have had outflows four of the past five weeks, and lost $400 million this week.

Investors turned on technology stocks, pulling $700 million from the sector. Defensive real estate stocks were the most favoured, attracting $400 million.

Cumulative flows into tech stocks, long-standing investor darlings, have stalled, BAML strategists noted, as doubts over their status as market leaders grew and sluggish economic growth weighed on performance.