Equity stock funds have increased their exposure to stocks, which could prove disastrous to investors should the market continue to decline, the Associated Press reports.

Funds can increase their exposure by investing in derivatives, leveraging, shorting or simply buying more stocks and bringing down cash holdings.

During the bear market of 2002, large-cap growth funds had only an 85% exposure to stocks, but today, that's 121%, according to carpenteranalytix.com. But even small-cap growth and small-cap value funds have increased their exposure to stocks.

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