Investors showed more interest in bond funds and the demand for equity mutual funds slackened as the curtain fell on a volatile 1998, executives at banks and mutual fund companies said.

"People are being a little bit more conservative," said Curt Anderson, head of retail brokerage at Busey Banks, Urbana, Ill. "I've had people say to me, 'Maybe we ought to consider bond funds.'"

The brokerage's bond fund sales, which normally account for about 20% of fund sales, have surged in recent weeks to more than 30%, Mr. Anderson said.

At Washington Mutual, Seattle, there has been an incremental shift-less than 5%-toward bond funds in the last few weeks, said Pamela Dawson, president of its retail brokerage arm.

"There is a pocket of our customers who are becoming a little more cautious," she said.

Softening sales of long-term funds mean lost commissions. And a shift toward bond funds can cut into revenues, since brokerages earn smaller commissions on vendors' bond funds than on their stock funds.

Bond funds also bring smaller management fees than stock funds do. In fact, Franklin Resources Inc. has said it expects disappointing first- quarter earnings in part because of a "continuing shift in the asset mix toward lower-margin fixed-income products."

Federated Investors, Pittsburgh, is another fund company that had a rise in bond fund sales as a percentage of all sales.

"Fixed-income sales were up in the fourth quarter largely because of the shakiness of the market on the front end," said Tony Fadool, national sales manager at Federated.

Bond funds accounted for 40% of Federated's sales through banks in the quarter, compared with 25% of sales for the entire year.

Data from the mutual fund industry's main trade group support the anecdotal accounts of the softening of the equity funds business.

Net sales of equity funds-meaning new sales minus redemptions-amounted to about $13 billion in November, according to the Investment Company Institute. That was up from $2.5 billion in October but down from $18 billion in November 1997.

November's net bond fund sales were $6.9 billion, up from $4.8 billion in October and $6.4 billion in November 1997.

Some bank brokerages reported that overall fund sales dipped at the end of the year.

At Comerica Inc., Detroit, all fund sales in November and December were off 5% or so from their average for the year, said Ron DiCicco, who manages Comerica's retail brokerage sales in Michigan.

That was partly due to a seasonal slowdown, he said, but investor anxiety may have been a contributing factor.

"There is still probably some apprehension about what might be going on in the marketplace for new investors," he said.

Though no breakdown of figures was available, Mr. DiCicco said, there has not been a shift toward bond funds. But that has been the case at Compass Bancshares, Birmingham, Ill.

In addition to a shift toward bond funds, clients have been buying more conservative domestic equity funds, said Randy Reynolds, head of Compass' retail brokerage.

Many investors have "shifted more to fixed-income and are less eager on equity than they were five months ago," Mr. Reynolds said.

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