BOSTON—“Investors are running scared, from fear to fear,” said Brad Durham, managing director of EPFR, a global fund tracking firm, during an address at the Fund Forum USA’s Global Fund Distribution Summit.

“2011 has been a year of fears, from the Greek drama and the fear of the collapse of the Eurozone, which  led to fears of a double-dip recession in the U.S. and collapsing corporate earnings,” Durham said.

“Then there was the debt ceiling debacle and the downgrading of U.S. debt, and fears of inflation in Europe spread to fears of inflation in America,” Durham continued. “There is a certain momentum in fund flows, and flows tend to be a leading indicator of market momentum and investor sentiment. I cannot say there are any signs of hope in early fund flow data in October that investors are getting their mojo back.”

Worldwide, year-to-date through September, bond funds have taken in $98 billion—but $92 billion has exited equity funds and $190 billion has been pulled from money market funds.

Since 2009, $745 billion has been poured into bond funds, $1.2 trillion has been redeemed from money market funds, and equity funds have essentially been flat.

Most troubling, Durham said, is the fact that instead of serving as the safe haven as they have in previous bear or volatile markets, money market funds are 38% below assets under management as of January 2009.

“Investors have awakened to some of the risks that are inherent in money market funds. And the fact is, the average U.S. money market fund has a 30% weighting to European debt, which has risen quite a bit in the past three or four years,” Durham said.

So where has the net $200 billion in redemptions over the past three years gone? “Under the mattress, in a tin can or in the bank. All offer about the same return,” Durham said. In some other cases, retail investors who have lost their jobs are drawing down their mutual fund holdings to survive, he said. Among institutional investors, some are directly purchasing short-term fixed income or floating rate securities, or putting it into venture capital or private equity.

“The latest trends in the global hunt for yield have been a movement into high-yield, municipals and mortgage-backed bonds. Among regionally focused equity funds, only Japan equity funds have year-to-date inflows, perhaps due to optimism or hope that economic growth will pick up in the reconstruction effort following the tsunami,” Durham said.

The biggest losers year-to-date through the first nine months of the year have been U.S. equity funds (-$47 billion) and emerging market equity (-$20 billion). Among all developed nation-focused equity funds, outflows were nearly $77 billion in the third quarter and have totaled -$51 billion for the first nine months of the year.

Among sector equity funds, there has been $15.7 billion in inflows year-to-date to U.S. equity funds focused on dividends. European dividend equity funds have seen $1 billion in inflows, and emerging market dividend funds have taken in $450 million.

In the flight to safety, commodity funds have taken in $11.8 billion in the first nine months of the year, real estate funds $4.6 billion, utilities $1.7 billion, energy funds $1.6 billion, and consumer goods $1.1 billion.

“Where will global fund flows go to in 2012?” Durham asked. “That depends on investor appetite for perceived risk, driven by the stabilization of the Eurozone crisis, U.S. economic data and China growth. Look to October flows for signs of flows in 2012.”

For now, EPFR’s best guess is that in 2012, high-yield bond, emerging market equities, emerging market bonds, financials and U.S. small-cap funds will be the biggest winners.

-- This article first appeared on Money Management Executive.