The passage of a sweeping US tax reform bill investors have been anxiously anticipating for months caused large redemptions in equities and bonds this week as a building consensus in the market suggested any benefits had already been priced in.

Global equities funds suffered their biggest outflows since the Brexit vote, losing $14.5 billion, EPFR data cited by Bank of America Merrill-Lynch strategists showed on Friday.

US equities funds were the worst hit after the $1.5 trillion bill’s passage as investors applied the trading adage “buy the rumour, sell the fact” to a reform many hoped would deliver a direct boost to company profits and shareholder returns.

Anticipation of a cut to the corporate tax rate had pushed money into US stocks seen as key beneficiaries, and helped drive global stocks higher.

But as the bill became a done deal investors pulled $17.5 billion from US funds in the largest redemptions since August 2014.

US value and small-cap funds had their biggest redemptions on record.

“Thus far in stark contrast to post-election flows of November 2016 to March 2017, prospect of fiscal stimulus not translating into “Trump trade” inflows,” noted BAML strategists.

Paradoxically, a falling Bull & Bear sentiment indicator as investors fled risky assets added to BAML strategists’ case for a strong start to 2018, they said.

Signs of greater caution and less bullish positioning could add fuel to the global rally as they indicate the exuberance of a market peak is further away.

Less bullish hedge fund positioning and weaker high-yield bond flows pushed the indicator down to 6.1, further away from the 8.0 level strategists label a “sell signal”.

“We believe this supports ongoing risk-on trade in Jan. 2018,” they wrote.

European equities, a favourite of the market this year, suffered a third straight week of redemptions for the first time since October 2016, with $0.8 billion flowing out of the asset class this week.

Only Japanese and emerging market equities were spared, drawing modest inflows of $1 billion and $1.4 billion respectively.

Bonds funds had their largest outflows in a year as investors pulled some $5.2 billion from high-yield bonds.

The eighth consecutive week of high-yield outflows marked the longest streak since the global financial crisis, and could be a harbinger of weaker returns.

US surveys suggest 5 to 6 per cent real GDP growth in the first quarters of next year, which could accelerate outflows from bonds, BAML strategists said, warning investors of “The 5% GDP Grinch”.