The holiday season put a pinch on the fund business in December, as net inflows were off by nearly half versus November.

According to fund-tracker Lipper, December equity net inflows of $12.4 billion were well short of the post-election rally a month earlier and further disappointing when juxtaposed against the stock market's impressive finish in 2004.

Bond funds suffered outflows of $2 billion, going in the red for the first time since July, while $5.5 billion in net outflows drained from money market funds.

In all, however, net flows into all types of funds were positive for December, $4.9 billion, marking a third straight month of plus signs. The mix of flows, Lipper Senior Research Analyst Don Cassidy said, was also favorable on an asset-type basis, since equity funds on average carry the highest advisory fees.

"Even allowing for the usual holiday lull in net flows, the results for equity funds were a bit disappointing considering short-term performance," Cassidy said. Investor choice continues to reflect caution and an overseas appetite.

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