In a research note the bank said redemptions for high yield and emerging market debt were the main driver of the $5.9bn outflows, with sovereigns also shedding money.
The bank said that confirmation of a likely September Federal Reserve rate hike had sparked much of the activity.
BAML also noted that adding the latest withdrawals from sovereign bonds to what has already happened in 2015 puts the annual outflows total on course to be the biggest in 30 years.
In emerging markets the ‘carnage’ as BAML put is was not only on the fixed income side, with equities seeing the largest outflows in six months.
BAML’s team justified their gloomy prognosis by pointing out that ‘big disorderly outflows’ from credit funds have in the past been preceded by a 3-5% sell-off in high yield and investment grade bonds over a two month period.
It cited Federal Reserve rate hikes in 1994 and 1999 as well as the 2008 crisis and more recently the ‘taper tantrum’ in 2013 as examples.
