Mutual funds slid in May as seasonal doldrums added to the effect of persistent uncertainty about equity markets.

Assets in stock funds fell to $143 billion on May 31, down 3.4% from a month earlier though still 1.6% above the yearend total, the Investment Company Institute said Friday. New sales were $16.9 billion, against $34.2 billion in April, the Washington research company said.

The numbers are normally down in May, after people have paid their tax bills.

Bond funds remained in a slump that has lasted all year. Yearend assets in taxable and municipal bond funds totaled $808.1 billion. By May redemptions had lowered those assets to $776.3 billion. Bond funds slid $4.73 billion, to $865.4 billion. Taxable and municipal bonds had combined outflows of $5.21 billion.

Hybrid funds declined $10.51 billion, to $349.3 billion. Their net outflows were $2.14 billion.

Bond funds' dismal showing was probably exacerbated by the Federal Reserve's interest rate increases, said Dennis Dolego, director of research at Optima Group in Fairfield, Conn. "Don't expect bond funds to jump further without a long bear market," he added.

Stock funds, on the other hand, usually get a boost from interest rate hikes because of regular monthly inflows into 401(k) programs, Mr. Dolego said.

Contributing to bond funds' weakness is the likelihood that investors are still chasing performance, said Mark Beeson, head of funds at Banc One Investments.

Sales of taxable bond funds were $10.2 billion, down $1 billion. Municipal funds' sales rose $240 million, to $2.64 billion, but suffered net redemptions. Sales of hybrid stock-and-bond funds were $4.1 billion, down $1.5 billion.

Fund groups that have experienced net redemptions are concentrating on controlling costs, and giving more attention to the most profitable sales channels, Mr. Beeson said. Banc One's growth funds have posted net inflows, and the firm is encouraging investors to seek balanced portfolios, he added.

Some classes of funds bounced back after the tax-season selloff. Taxable money market funds, after net cash flow losses of $52.4 billion in April, posted $18.4 billion in new inflow for May.

Mr. Beeson pointed out that taxable funds tend to fall just before tax season. "With IRA season ending and the rumbles in the market, expect a dropoff in cash flows," he said

Figures for June will probably show a flattening or yet another drop in fund sales, and the trend will probably last through summer, Mr. Dolego said.

Meanwhile, value funds have been posting lower net redemptions than at any time in the past seven months, according to data from Financial Research Corp. in Boston. Value funds have had positive year-to-date returns, unlike large, midcap, and small-cap growth funds, the company said.

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