Nervous investors are apparently giving bear funds another look after last month's terrorist attacks sent already troubled markets into turmoil.

The products, which garner positive returns by betting on the declining value of securities, are typically marketed as a way to hedge portfolios over the long term. But flows in the products are on the rise.

Michael Sapir, chairman of Profunds, which offers three bear products, said his company has seen a "slight uptick" in bear fund assets since last month's terrorist attacks. "The natural inclination of a lot of people is to run into money market funds," he said. "And a lot of people aren't aware that this sort of product is out there. But awareness is increasing. We think a lot of people will hedge their portfolio with these funds."

In general, the products, also known as short funds, have posted negative flows so far this year, according to the Financial Research Corporation.

But flows have increased by nearly $692 million since 2000, from negative $699.3 million in 2000 to negative $7.6 million year to date. Bear fund assets totaled $887.4 million at the end of this year's second quarter.

Other types of funds that are designed to weather volatile financial markets also appear to be providing panicky investors some refuge. Federated Investors' ultra short fixed income products have been selling well recently.

"We've seen a spike in these products over the past 12 months and particularly over the past two weeks," said Tim Pillion, who heads Federated's bank marketing and sales division.

Marketing efforts for Profunds bear products is scant, and Sapir said he won't likely change that strategy. For one, the products are timely, meaning they're only effective when markets sour. By the time Profunds assembled an effective--and expensive--marketing campaign, Wall Street could have recovered, he said. For another, the company is trying to be sensitive to the nation's mood in the wake of the attacks.

"As a company, we need to be sensitive to any perception that we're trying to capitalize on the tragedy that happened a couple of weeks ago," he said.

Other firms, meanwhile, aren't seeing much activity in the products. Flows into Rydex's bear vehicles, for example, have amounted to a trickle. Investors socked large amounts of assets into the funds during the currency crisis of 1998, said Spokeswoman Anna Haglund. They did the same at the end of 1999, unsure of how markets would react to the year 2000 and the much-hyped chaos that could ensue. But this month Rydex investors left bear funds alone, she said.

"I'm pleasantly surprised," Haglund said. "People have taken a pretty reasoned approach to what's gone in the past two weeks."

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