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Net Flows Fall 42 Percent

The net new cash flow of long term mutual funds was a little over $12 billion in September, down 42 percent from August, according to the Investment Company Institute of Washington, D.C. Net flows rose 38 percent in August, according to the ICI.

The sharp fluctuation is due, in large part, to the increased volatility of the market and the quick reactions of investors, analysts say.

"These days, investors are very quick to react to the market's ups and downs," said Ramy Shaalan, a mutual funds analyst at Wiesenberger, Thomson Financial of Rockville, Md. "With increased market volatility, it's not surprising to see these changes in flows."

So far this year, only once, in April, was there a percentage change of less than 26 percent for long term fund flows, according to ICI.

Stock funds have had consistent inflows while hybrid and taxable and municipal bond funds have had consistent outflows. The year-to-date net new cash flow for stock funds is over $272.02 billion, compared with $123.29 billion at this time last year, according to the ICI. The last time stock funds had negative net flows was August 1998, according to the ICI. Hybrid, taxable bond, and municipal bond funds, by comparison, have had year-to-date net outflows of $28.95 billion, $29.57 billion and $15.41 billion, respectively, according to the ICI.