Investors showed uncanny calm, inertia or perhaps even malaise during the recession, with a scant 1% selling out of equity funds at the height of the market volatility in October 2008, Vanguard found.

However, perhaps even more earth-shattering is that investors have gravitated to bond funds, unlike other rebounds, when investors returned to equity funds. The extreme volatility investors witnessed in 2008, coupled with the memory of a second bear market and the dot-com crash in the past 10 years, has evidently caused new reactions.

In the 2003 rebound, investors took $265 billion parked in money market funds and put $152 billion into equity funds and $51 billion into bond funds. Through November 2009, however, they pulled $500 billion from money market funds and $9 billion from stock funds and invested $340 billion in bond funds.

Vanguard researchers believe investors may have become more risk-averse or risk-sensitive than in the past and see fixed-income investing as the next logical step from money market funds.

Vanguard also found that the 1% who sold out of equities in October 2008 tended to be men age 65 or older or people who had little equity exposure to begin with. Investors in balanced funds tended to stick with the market – and do better.

For instance, from the start of the bear market in 2007 through Dec. 31, 2009, an investor with a 100% stock portfolio lost nearly 25% while an investor with a 50% stocks/50% bonds portfolio lost only 5%.

"These results are consistent with the notion that investors may be better able to maintain a broadly diversified investment strategy through the use of balanced mutual funds than by assembling a portfolio of individual funds from different asset classes," said John Ameriks, head of investment counseling and research at Vanguard and author of the report, "Equity Abandonment in 2008-2009: Lower Among Balanced Fund Investors."

Vanguard also released a companion report, titled "2009: A Return to Risk Taking," perhaps a misnomer.

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