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Fund flows dropped dramatically in March from the first two months of the year and markets went on a roller coaster ride in April. But that does not necessarily mean fund flows will sink further in coming months, according to some industry analysts.

"I'm guessing here that the strong returns funds have had relative to broader market averages have rekindled interest in funds," said Edward Rosenbaum, director of research for Lipper of Summit, N.J. and one of those analysts. "It's sometimes the case that flows follow performance. I think flows are stickier than people realize."

Fund flows sank $36 billion from a net $53 billion in February to just $17 billion in March, according to Lipper. Equity funds attracted $18 billion in new money. Bond funds had net outflows of $8 billion and money market funds had net flows of $7 billion. Within the equity category, $28 billion flowed into diversified growth funds, $12 billion went into technology funds while all other equity funds suffered $22 billion in outflows, Lipper reported. Over half of the outflows were reported in value funds, as the sector continued to sag with outflows totaling $12 billion.

Preliminary Lipper data indicates flows for April may not have fallen further as might have been anticipated, he said. Low transaction volumes, funds' strong performance following the drops in the market, anecdotal evidence reported in the media and investors' sentiments are clues to what April sales will prove to be, Rosenbaum said.

An additional factor that might buoy fund flows against April's turbulent markets are 401(k) plan participants who are traditionally slower than investors overall to change their investments, he said. Also, investors may have seen the slump in the markets as a buying opportunity instead of a reason to hold back from investing, he said.

The average net flow into diversified equity funds for the first three months of this year was $19.4 billion at the same time the Nasdaq, Dow Jones and S&P 500 indexes sank 10.79, 4.42 and 0.22 respectively, according to Lipper. Average monthly net flows into diversified equity funds in 1999 was only $8.6 billion.

Some companies managed to prosper amid March's slumping markets, while other, more well-known funds groups suffered, according to Financial Research Corp., a financial services tracking and consulting firm, of Boston. March was tough on Fidelity Investments of Boston as its net flows dropped from $1.5 billion in February to a negative $500 million in March, according to FRC. Meanwhile, the net flows of Vanguard of Malvern, Pa. fell from $1.8 billion in February to a negative $386 billion in March, according to FRC.

Net flows for Van Kampen Funds of Oakbrook, Ill. rose from $463 million in February to $1.1 billion in March, according to FRC.

AIM Distributors of Houston had $1.2 billion in net flows in February and $1.8 billion in March.

Janus of Denver had nearly $9 billion in flows, down about $1 billion from February but still considerably higher than the $3.5 billion in net money it attracted in March 1999, according to FRC.

Funds that enjoyed a relatively strong March may have benefitted from trailing performance from previous months, according to Geoff Bobroff, president of Bobroff Consulting of East Greenwich, R.I., a mutual fund consulting firm.

Funds with weak net flows in March are generally not significantly shifting their strategies, he said.

"It would appear they are staying the course and my sense is that they have not abandoned their strategies," he said. Firms with good flows in March will probably remain reserved about the performance of their funds and not advertise past results too heavily because it will be difficult to match those results, he said.