In spite of the continued market rally in May, equity mutual funds attracted $8.2 billion in the month, down from the $14 billion in April, Lipper reported Wednesday. It was the first time in a year that that equity funds had three straight months of inflows, and the types of equity funds that investors preferred were conservative – namely income, balanced and convertible securities funds.

Bond funds continued to attract a fair amount of money, taking in $9.4 billion. But money market funds lost a whopping $15.9 billion. Overall, for all types of mutual funds, the industry netted $1.7 billion during the month.

As to why the enthusiasm for equity funds waned, Lipper analysts theorized that April’s inflows were so strong due to the end of the war, thereby going through a so-called "relief rally."

"If you could bottle dividends right now, they would be flying off the shelf," said Lipper Senior Research Analyst Don Cassidy.

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