A dip in net inflows for most mutual fund categories in November should give credence to assertions that a bear market is emerging.

Mutual funds got $8.82 billion of new cash in November, down more than 50% from October, according to the Investment Company Institute, a Washington trade group. The November net inflow was the smallest since February 1999, when funds took in $711.9 million.

Total assets in mutual funds fell 10% from October to November, to $3.86 trillion, according to the group.

Net inflows in most major mutual fund investment categories fell as well, according to a report issued last Wednesday by Boston’s Financial Research Corp.

In the stock fund category, net inflows for November were down $1.4 billion from October. Net inflows have gone down steadily since last February, when they had reached a high of $53.68 billion. Since then, monthly net inflows have been between $17 billion and $24 billion.

Geoffrey Bobroff, a mutual fund consultant in Providence, R.I., said that the net inflow drops can be attributed to the drastic downturn in the Nasdaq composite. In November, the Nasdaq fell 23%, its worst month since October 1987. This, he said, caused people to take their money out of mutual funds and put it elsewhere.

“It doesn’t really surprise me or anyone else that mutual fund flows are suffering,” Mr. Bobroff said. “We are in a different market environment here than we have been in for the past five years.”

Mr. Bobroff said investors have been spoiled by a market that bounced after they bought on the dips. Now, he said, they are faced with the reality of successive dips.

Henry Schilling, a mutual fund analyst with Moody’s Fund Management Group, said this downturn in net inflows is an indication that the dips are beginning to affect investor attitudes. He predicts that this slide will lead investors away from stock funds and into fixed-income products.

And so far, the decline in stock funds has been doing just that. Government bond funds took in $290 million, marking their first month of positive net inflows since April 1999, according to the Financial Research Center.

But Mr. Schilling said that net inflows have increased in fixed-income products as investors anticipate interest rate cuts this month. He also said he does not believe the trend will continue.

“Investors are going to reallocate their balances for a period and look for some shelter from the volatility,” he said. “I think once they see some sort of stability or some sort of bottoming out, they are going to open up the spigot back into equity-oriented funds. The trend still favors equity investing over the long haul.”

Money market funds are also getting a boost from the downturn. Mr. Bobroff said people are shifting their assets into money market funds, where the downside is not as severe. According to Lipper Inc. of Summit, N.J., 85% of new money, or $50.2 billion, that came into mutual funds during November went into taxable money market funds, compared to the $26 billion in October.

In addition, average cash levels of stock mutual funds rose to 6.5% from 6.0% in October, making them the highest since November 1997, when the figure was also 6.5%, according to the Investment Company Institute.

Rosanne Pane, director of fund services at Standard & Poor’s, said she sees today’s higher cash levels as a good thing. For the past five years, when the cash ratio went above 6%, the Standard & Poor’s 500 returned an average of 8.5% over the next three months, she said, but when the ratio went below 6%, the index returned only 1.4%.

Mr. Bobroff said he thinks cautious investors will keep their money in value-style funds for the first two or three quarters of 2001, or until the market shifts.

“Value funds are producing slight percent increases that are great in a market where the Nasdaq is tumbling, but if the Nasdaq even goes up slightly, a wandering eye will cause investors and portfolio managers to return to growth,” Mr. Bobroff said.

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