Volatile redemptions from and investments in mutual funds are due not just to market returns but also to an entirely different approach investors are taking to fund ownership, according to a report from ReFlow.

Though the mutual fund industry experienced a net outflow in 2008 for the first time in 20 years, flows became more volatile in 2006, ReFlow said on Thursday it had found through analysis.

"Flow volatility is an ongoing trend that may not reverse even as the market recovers and net flows generally turn positive," said Paul Schaeffer, the president of ReFlow. This counters the widely held belief that volatile asset flows are a temporary or cyclical phenomenon, he said.

Greater volatility in flows can hurt performance and increase costs as redemptions force the hand of portfolio managers.

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