Sales of mutual fund shares are on the rise-but the rate of redemptions is continuing to increase even faster.

According to the Investment Company Institute, total assets of long-term funds rose $207 billion in June because of increasing sales and good investment performance.

Most new money that investors poured into mutual funds in the month went into equity funds. But though they put almost $70 billion into that category, they cashed out about $60 billion.

Compared with June 1998, redemptions of equity funds were up 18%, compared with a 13% rise in sales.

In taxable bond funds, the second most popular kind of fund, sales in June were up 8% from a year earlier, while redemptions rose slightly faster, at 8.5%.

Sales of hybrid funds were off 9%, while redemptions were up 12%. And sales of municipal bond funds rose 13%, while redemptions in those funds shot up 29%.

Bank brokerage heads had several ideas about why redemptions are on the rise.

Mike Mortensen, the president of the brokerage arm of PNC Bank Corp. of Pittsburgh, said many investors are putting money into individual stocks, where they hope to hit it big.

"Just about everybody wants to have some position in individual equities because they are hoping to own the next Microsoft or Dell or some of these wild Internet stocks that have just gone nuts," he said. "I don't necessarily think that's a good trend, but there is some of that going on."

Though they have received lots of media attention, day traders probably account for just a tiny part of the phenomenon, he said.

Ed Hipp, the president of the brokerage at Centura Bancorp of Rocky Mount, N.C., said part of the redemption trend is probably explained by investors moving some of their equity fund assets to bond funds.

Having reaped fat profits for several years, they are interested in protecting their principal and the profits they have accrued.

"People are locking in gains," he said.

Mr. Hipp is advising those who use asset-allocation models to increase their bond holdings. Those who had 15% in bonds should think about making that 20% or 25%, he said.

"If you're at all committed to asset allocation, you need to be moving to bonds," he added.

For the first half of the year, sales of stock funds were up 19%, compared with 34% for redemptions. Total assets in long-term funds at the end of June were $6.07 trillion, up 3.4% from May.

The best-selling mutual fund in the first half was the Vanguard 500 Index Fund, which had net sales of $8.7 billion, according to Financial Research Corp. of Boston. The second most popular fund, Janus 20, had $7.2 billion of net sales.

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