Mutual fund investors appear to be biting the bullet amid market turbulence and talk of the recession, the Associated Press reports. But most of their money is pouting into money market and bond funds, $75 billion and $4.5 billion, respectively, along with renewed interest in dividend-paying instruments.


In July, investors pulled $27 billion out of stock funds than they invested, yet there was still a $52 billion inflow in the month on the strength of money and bond fund sales, according to Strategic Insight.


Put in perspective, Strategic Insight said, for every $1,000 held in stock funds, they lost $3 during July. And of the $7 trillion held in stock funds, the category has lost only $20 billion in the seven months ended July.


In the second quarter, while the stock market hit most mutual funds, the majority still managed to post net inflows, according to Standard & Poor’s Rating Service. Worldwide, however, fund firms’ assets declined 3.6%.


“Against market performance, the rated asset managers performed better than expected,” S&P reported. BlackRock, Janus Capital and Waddell & Reed in particular posted strong performances.


Strategic Insight is optimistic the withdrawals are only temporary. “What we have found is that when there is a downturn in the markets, it is not unusual for investors to pull money out of mutual funds, but these redemption periods tend to be short-lived,” said Loren Fox, a research analyst with Strategic Insight.


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