As worries about the war with Iraq mounted last month, investors poured even more money into bond funds and increased their withdrawals from equity funds, according to Lipper.

Last month, bond funds took in an estimated $19 billion, the most since August of last year, and third highest total on record. Meanwhile, equity outflows widened from January’s pace of $1 billion to $8 billion. Money market funds saw outflows of $43 billion, for a net outflow of $32 billion for all major fund types combined.

Lipper expects equity fund flows to take some time to turn positive in 2003, even after stocks demonstrate an upward trend, and that’s assuming a best-case scenario in Iraq. Regardless, Lipper expects the asset-management industry to continue to experience pressure on margins.

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