The move out of equity funds by investors has not only increased, it has become a longer-term trip. Early estimates of September outflows from stock funds indicate that investors took out a record $43.9 billion from U.S. stock funds, according to TrimTabs.com. The outflows alone are problematic, but what might constitute an even larger problem for predominantly equity fund firms actually began in August, namely the direction of those outflows. In August, investors continued to turn not only to fixed-income funds, but to longer-term bond funds, according to Lipper. Long-term bond funds had inflows of $15.4 billion in that month. Those funds experienced outflows in every month last year and while they have had consistent inflows this year, average net sales have been $5.5 billion per month, according to Lipper.

Stock funds experienced net outflows in June, July and August and that, due at least in part to the recent tragedies, has been exacerbated in September. The overall market downturn began about 18 months ago, and investment managers and shareholders alike have waited for and speculated on when the market would turn around. The movement into long-term bond funds suggests that investors no longer think that a return might be approaching soon, according to Donald Cassidy, a senior analyst at Lipper. And that was before the attacks of Sept. 11.

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