Meanwhile, Federal Reserve policymakers, widely expected to hike U.S. interest rates in December, said in a statement on Wednesday they see inflation quickening. Rising rates and inflation could be a toxic combination, eroding bond prices.

"In a time like this, between the Fed and the election, everyone's looking for safe havens," said Pat Keon, research analyst for Thomson Reuters Lipper. "Everyone's just looking for safety."

U.S.-based equity funds recorded $3.4bn in withdrawals during the latest week, the data showed, adding to a poor run for sales of many stock funds.

The U.S. bond fund outflows were a striking turnabout for investments which have largely been in favor with investors since February. The funds have took in $193bn this year through September, according to the Investment Company Institute, a fund industry trade group.

Yet the $4.1 billion redemption for products invested in riskier, high-yield debt, during the latest week amounts to the largest outflows since a August 2014 market rout, Lipper data showed. The funds' average -1.2pcreturn during the latest period is its worst showing since February.

And the $2.5bn pulled from investment-grade corporate bond funds was the most pulled since December 2015, when sinking oil prices pushed some energy firms to the brink of collapse.

Concern about oil prices has also returned, with U.S. crude CLc1 sinking 13 percent from $51.60 about two weeks ago to settle at $44.69 on Thursday.

Emerging markets stock and bond funds also fell out of favor, Lipper said, recording withdrawals of $397m and $346m, respectively.

Money market funds, where investors park cash, attracted $22bn, the highest inflows since June, Lipper said.

Likewise, safe-haven Treasury bond funds took in $998m. Bond funds designed to hold their value as inflation ticks up took in $724m, according to the fund research service.

Financial sector funds took in $366m in their biggest haul since August, Lipper said. Banks are expected to earn more from lending as benchmark rates rise.

Report from Reuters