This is turning out to be a good year for index funds. Through April 30, both equity and fixed-income index funds have captured close to 75 cents of every one dollar investors have invested in mutual funds, according to Lipper of New York.

Of the $32.2 billion of new money that flowed into mutual funds year-to-date through April 30, more than $7.5 billion has flowed into index funds, according to Lipper. That means index funds have so far this year snared 23 percent of all assets, said Don Cassidy, senior research analyst with Lipper.

That is a far less than the asset inflows the mutual fund industry had during the first part of last year. During the first four months of 2000, while there were inflows of $149 billion - more than 4.5 times this year's flows - only nine percent, or $13.6 billion, flowed into index funds.

Flows into index funds rose slightly for the remainder of last year. For all of 2000, index funds accounted for 11 percent of fund inflows.

"This year, there has been a [reversal]," said Cassidy. More investors are putting assets into index funds this year than last year, he said. That is due to the defensive postures many fund investors have adopted, he said.

"When the market is great, we all do aggressive stuff," said Cassidy. "But during bad months in the market, a higher percentage goes into index funds." Investors have chosen to diversify holdings via index funds rather than investing in more narrowly-focused sector or regional funds, he said. Many investors have simply decided that they cannot hope to do better than the returns of the markets themselves and have opted for more passive investments.

But while 86 percent of all assets going into index funds last year were invested in S&P 500 index funds, only 17 percent of index fund assets went into such funds this year, said Cassidy.

"The volatility in the market has caused people to seek refuge in index funds which offer diversification," said Kristin Adamonis, research analyst with FRC of Boston. Three of the top ten selling mutual funds this year through April 30 were index funds managed by Vanguard Group of Malvern, Pa., according to FRC.

Vanguard has had cash inflows of $6.8 billion into just its indexed mutual funds in the first four months of 2001, said Adamonis. Fidelity Investments of Boston has been running a distant second with index fund inflows of $979 million. Charles Schwab of San Francisco was third, attracting $623 million into its index funds.

The Vanguard Total Stock Index Fund, which loosely tracks the very broadest market index, the Wilshire 5000, attracted more than $2 billion so far this year, making it the third best selling fund, behind the PIMCO Total Return Fund and the Davis NY Venture Fund.

But Vanguard has also seen investors pay significant attention to bond index funds. The Vanguard Total Bond Index Fund took in $1.77 billion through April 30 of this year. Vanguard's S&P 500 Index fund has had inflows of $1 billion through April 30.

Vanguard, with $222.2 billion in assets among its 47 index funds, remains the largest manager of index funds, according to Morningstar of Chicago (see accompanying chart.) Fidelity manages $31.1 billion among six index funds, while Schwab has $19.9 billion in 16 index funds.

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