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Equity Funds Suffer First Year of Outflows Since 88


With a total loss of $10 billion, equity funds have seen their first year of outflows since 1988, and inflows into bond funds are on pace to reach record heights, according to Lipper's November fund flows report.

Equity funds showed outflows of $10 billion in November, with $3 billion coming from institutional classes and $7 billion from retail. November marks the first month that equity funds had made gains since May. Other fixed-income funds had inflows of $7 billion, with $1.6 billion in institutional classes and $5.4 billion in retail classes. And money market funds had inflows of $119 billion.

As for diversified equity funds, large-cap saw a total net outflow of $2.9 billion, with inflows of $3.9 billion in multi-cap, $1.6 billion in mid-cap and $1.7 billion in small cap. That makes for a total of $4.3 billion of inflows overall for U.S diversified equity funds. Fixed income had total inflows of $126 billion for the month.

Inflows into bond funds in November were an estimated $7 billion, according to Lipper, marking the 11th straight month of inflows. Net inflows in 2002 are almost sure to surpass the $120 billion record set in 1986, according to Lipper. Currently, inflows stand at $127 billion for 11 months of 2002.

Money market fund flows remained strong at $119 billion, more than doubling the average over the last three years of $55 billion. Retail classes continued a pattern, showing outflows of $6 billion.

"Ironically, the best of all 2003 likely worlds for the fund business may be a slow economic rebound and a flat bond market plus a modest rise in stock prices," said Donald Cassidy, senior analyst at Lipper.