NEW YORK: Investors worldwide pulled $3.8 billion out of bond funds in the week ended June 24 on growing expectations that the Federal Reserve will hike interest rates this year, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The outflows marked the third straight week of withdrawals from the funds and the biggest three-week outflows since July 2013, according to the report, which also cited data from fund-tracker EPFR Global. The latest outflows were down from $10.3 billion in withdrawals the prior week, which were the biggest in two years.

Government bond funds, which largely invest in US Treasuries, posted $1.4 billion in outflows to mark their ninth straight week of withdrawals, their longest outflow streak since Jan. 2013. Investment-grade bond funds posted their second straight week of outflows, at $1.9 billion.

Riskier high-yield bond funds posted $67 million in outflows to mark their third straight week of withdrawals. Stock funds attracted $4.6 billion to mark their second straight week of inflows. All of the demand went toward international-focused funds, while funds that specialize in US shares posted their first withdrawals in four weeks, at $4.6 billion.

European stock funds attracted their biggest inflows in 11 weeks at $3.4 billion. Japanese stock funds attracted $3 billion, while emerging market stock funds attracted $1.7 billion after posting outflows the prior week.

"The writing is on the wall now in that we will see an interest rate hike, most likely before the end of the year, and more probably in September," said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York, on the outflows from bond funds.

The Fed's rate hikes are expected to hurt bond prices.

Cavanaugh cited recent data showing improvement in US retail sales. Commerce Department data earlier this month showed US retail sales surged 1.2 percent in May.

Cavanaugh said investors likely continued to favor international stocks over US shares on the view that they are cheaper and better-supported by loose monetary policies in Europe and Japan, but cautioned against such a move since economic improvement in the United States should boost corporate earnings.

"I think it's a little short-sighted for investors to be piling out of US equities," Cavanaugh said. She said the benchmark S&P 500, which has risen about 2.4 percent to 2102.31 this year through Thursday, should rise about 4.6 percent more to 2200 by year-end.