MONEY RETURNS TO MUTUAL FUNDS.

Byline: Edward Wyatt The New York Times

Nearly half the $4 billion that rushed out of equity mutual funds a week ago trickled back in during the week that ended Wednesday, data released Friday showed. But the amount of cash flowing into mutual funds that invest in stocks continues to slow and has fallen by about 75 percent over the last two months.

AMG Data Services of California, an independent fund-tracking company in Arcata, reported that investors put $1.9 billion into equity funds in the week ended Wednesday. While that turnaround is encouraging, ``we're still seeing a continuing decline in sentiment toward equity mutual funds,'' said Robert Adler, president of AMG.

That confirms anecdotal evidence from interviews this week with executives at several fund companies. They said that investors recently favored money-market funds, which invest in short-term cash instruments, over stock funds, particularly the volatile aggressive growth funds that were wildly popular earlier this year.

Investors' uncertain appetite for equity funds comes as the stock market has gyrated wildly over the last several weeks. After jumping more than 50 points Friday, the Dow Jones industrial average finished the week with a gain of 46.24 points, at 5,473.06. Other indexes lost ground, however.

The Standard & Poor's 500 stock index fell 2.83 points over the five-day span, closing at 635.90. And the Nasdaq composite index lost 18.24 points, or 1.7 percent, to close the week at 1,079.44.

According to AMG, a moving average of weekly inflows to stock funds fell to $1.06 billion in the most recent period from $4.51 billion in the first week of June. In January, the industry's biggest month ever for cash inflows to stock funds, the weekly moving average briefly topped $10 billion.

The fund industry felt a significant shock, therefore, when AMG reported that $4 billion, or about three-tenths of 1 percent of the assets in stock funds, departed in the week that ended July 17. That was the first such weekly outflow since October and the largest since AMG started tracking weekly cash flows in January 1992.

``Last Monday, everybody was going crazy about that $4 billion,'' said Jessica Bibliowicz, an executive vice president at Smith Barney and head of its mutual funds group. ``While that number on its face looks scary to investors, as a percentage of assets it's not that significant.

``What was more scary was the $25 billion that flowed into mutual funds in May, with 37 percent of that going into aggressive growth funds.''

The aggressive growth funds, which invest in small, fast-growing companies, have been hit hardest in the market decline of the last two months.

History has proven that investors who flock to hot-performing funds when the market is overheated tend to stay around for shorter periods than the average mutual fund investor.

The Investment Company Institute, a fund industry trade group, reported last week that inflows to aggressive-growth stock funds slowed in June. The group took in $3.6 billion of the $14.5 billion that flowed into equity funds, or about 25 percent of the total.

Inflows to growth funds also fell by about half in June, to $2.6 billion from $5.5 billion in May. Growth and income funds, a more conservative group of funds that buy stocks of companies with growing earnings and rising dividends, took in $4.7 billion in June, down from $5.7 billion in May.

This month, AMG's data showed, the quickest moves have been made by investors diving in and out of the most aggressive funds.

``That shows that there is still a speculative sentiment in the market,'' Adler said. Nearly half the $1.9 billion in net inflows in the week ended Wednesday went to emerging growth and aggressive growth funds, he added.

Not all fund shareholders are inclined to switch in and out of high-growth funds quickly. For example, at Scudder Funds, net cash flows have remained positive in at least one subgroup of assets: the $13 billion in mutual funds that are marketed through the American Association of Retired Persons.

``We've seen very positive cash flows the whole month,'' said Karen Igler, an assistant vice president at Scudder, who added that this was true even when the equity market turned sharply downward.

In contrast, at Charles Schwab & Co., investors have withdrawn about $600 million more from equity funds than they have put in so far in July. Schwab operates the largest mutual fund supermarket, where investors can buy funds from dozens of different fund companies through one brokerage account.

Schwab tends to attract customers who are more likely to hold funds for short periods or frequently switch between stock funds, bond funds and cash accounts.