Bond funds had their worst month in at least 20 years and possibly ever, according to data released by Lipper.

Bonds bled $15.3 billion in August, well ahead of the $11 billion in outflows suffered in November 1994. Short and intermediate bond funds saw $9.1 billion walk out the door, while $6.2 billion in long-term bond assets filed out.

Money market funds were not faring much better, as nearly $25 billion drained away in August, $22 billion of which was in taxable funds. So far, $175 billion has exited the product so far this year, nearly quadrupling 2002's full year total.

"The abandonment of bond funds after a torrid love affair into last winter is striking, and speaks to a short-term mentality," said Don Cassidy, senior equity analyst at Lipper. "The inflows into stock funds are impressive, on the other hand. The passage of time has cumulatively helped to heal investors' wounds, and a strong and sustained rise in stock prices since mid-March has boosted confidence." Equity funds continued their full charge ahead, gaining $26 billion in net inflows in the month, the third-largest total in more than three years.

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